U.S. tests new inflation index

WASHINGTON The Labor Department Thursday introduced anexperimental consumer price index that supports warnings of FederalReserve Chairman Alan Greenspan and other economists: Thegovernment's main inflation gauge exaggerates the cost of living.

Under the new index, prices Americans pay for goods and servicesrose by about 3 percent in 1996, down from 3.3 percent as measuredusing the current formula. That translates roughly to an annual 0.25percentage point overstatement of inflation.

The Bureau of Labor Statistics "has received a lot of blame forputting out an index that is not accurate," said Asha Bangalore, aneconomist at Northern Trust Co. in Chicago.The …