In assessing what price changes in a particular category imply for future price changes in that category, the staff uses not only various forms of time-series analysis but also specialized knowledge about how the various indexes are constructed – for example, whether certain categories are sampled every month in all localities and how seasonal adjustments are performed.
In making very near-term price forecasts, the staff also uses diverse information from a variety of sources, such as surveys of prices of gasoline and other important items, news reports about price-change announcements, and anecdotal information from our business contacts.