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Actually, in this case Labor Department's numbers were pretty close to accurate, according to two MIT Sloan School of Management economists, Roberto Rigobon and Alberto Cavallo, who established a serious, independent and transparent effort to verify and study price changes and trends. They call it the Billion Prices Project and their website (http://bpp.mit.edu) collects all the available data about daily prices and indexes from all over the world, so it provides essentially a "real-time" price movements and measurements of price changes.

Their methodology, unlike Labor Department's, includes "volatile" items such as food, beverages as well as items sold through online channels but doesn't include education and transportation (which Labor Department includes in calculating CPI) because they don't change frequently and aren't critical to the index calculation, and transportation costs are mostly reflected in prices of consumer items. The MIT economists have been collecting data and calculating the index for the last three years. They were able to detect the onset and the ending of the last U.S. recession and hope that the data and the website can be used in the future to estimate and evaluate CPI more accurately and timely.

Excerpt from Inflation in Real Time - B, by Robin Goldwyn Blumenthal, 2010 November 13:
< snip > ..... Interestingly, the MIT Sloan index has been "very close" to the oft-maligned government indicator, Rigobon says. As for Palin's and others' contention that food prices have risen "significantly" over the past year, Rigobon begs to differ. After a fast start, they've been flat since July, up for the year about 1%. Says he: "I'm a Republican, but I think Bernanke is doing the right thing."