Last year, the Federal Reserve was caught off guard when the Bureau of Labor Statistics released revised Consumer Price Index figures showing inflation rose in December 2022 and did not fall as previously thought.

That left Fed officials bracing for the latest batch of revised CPI data, released Friday morning, which some feared could take away the inflation progress they observed last year.

That wasn’t the case though. Instead, officials got some good news: December’s monthly inflation wasn’t as bad as initially reported, according to newly revised figures from the BLS.

The new adjustments indicate prices increased by 0.2% in December from the prior month, compared to the initial estimate of 0.3%.

And for other months last year, initial data was either unchanged or revised by no more than one-tenth of a percentage point up or down.

The adjustments take into account recalculations of seasonal adjustment factors. However, this doesn’t impact the annual inflation rate the BLS reported, which remains at 3.4%. That’s a significant improvement from the end of 2022, when prices were increasing by 6.5% on an annualized basis.

Recent data revisions have complicated the Fed’s monetary policy decisions

Fed officials have been complaining about data revisions to key economic reports lately.

“We have to make decisions in real time,” Fed Governor Christopher Waller said late last year. “Whatever data is released, that’s the data I have to use. The problem with data is it gets revised.”

That wouldn’t necessarily be so much of an issue if the revisions, which can come months after initial reports are released, were relatively small. However, many revisions over the past few years have been game-changers.

Some of the biggest revisions came from the BLS’ monthly jobs report where often the initial number of jobs added is vastly different from the final revised figures.

That matters a lot for central bankers as they aim to bring inflation back down to their 2% annual target while limiting job losses. So if, for instance, at first it looks like job gains slowed a lot in one month, they could give more consideration to cutting rates sooner. But if revised data indicates that job gains didn’t actually slow that much in a month, cutting rates could move the inflation rate further from their target.

That’s partially why Waller said last month he would be paying close attention to Friday’s revised CPI data since it could potentially change “the picture on inflation.”

His comments heightened investors’ interest in the data, Kieran Clancy, senior US economist at Pantheon Macroeconomics, said in a note on Friday. “But he merely was covering all the bases with regards to inflation risks,” Clancy added, noting that “he likely was surprised by the scale of attention his comments received.”

“In short, these revisions to the seasonals are a damp squib,” he said.