Herve Hannoun of BIS has a nice speech on the topic. The speech is given during Irving Fisher Committee Conference.
He says monetray stability can only be achieved if we know the actual inflaiton level. For latter, we need to continue to review our stats
As monetary stability is no less important, I find it highly appropriate that the first session of this conference is devoted to “New monetary policy indicators”. No topic could be more topical, given the vigour of the current debate about the supposed threat of deflation. But no debate can be productive, especially at the policy level, unless the supporting data are sound. In this light, measures of inflation and inflation expectations are surely an appropriate focus for an intensive review by central bank statisticians – and I would like to raise the question here if the IFC might not play a catalytic role in that process. Let me start by revisiting the intricacies of inflation measurement
He points how fin markets say inflation is too low whereas households think it is high:
Has the public understanding of CPI measures improved? As you know consumer surveys reveal a large gap (6% in some cases1) between inflation as measured by the statisticians and inflation as perceived by the public. In other words, the general public may view price trends very differently from financial market participants who complain that “inflation is too low”. And, needless to say, if the central bank itself starts to express concerns that inflation is too low, it may find it difficult to convince the public of its case.
He shows how financial markets expectations of deflation in EU is misplaced given how the long term trends have been.
In the speech he also discusses ways to improve statistics on inflation..