However, there could be an important difference between a target of a low positive rate of inflation and one of a zero rate of inflation. Many potential inflation targeters ask, “Why not zero?” There are three reasons for targeting for an inflation rate above zero. The first is measurement bias. Try as they might, most countries do have some bias in their price indexes.
It is hard for governmental statistical agencies to eliminate the measurement bias that occurs whenever new and improved goods are introduced to consumers, and new and improved goods are continually being introduced. It is also hard to deal with substitution bias by updating the weights on various consumer goods.