The Google Price Index

Anonymous1987

An interesting development, Google has set about constructing a daily price index based on online shopping information. Initial findings show:

“very clear deflationary trend” for web-traded goods in the US since Christmas. Although the data are not seasonally adjusted, Mr Varian said that prices rose during the same period a year ago. The ‘core’ CPI in the US, which excludes food and energy, rose 0.9 per cent on a year ago in August.

“It’s a quite different picture if you go to the UK where you see a slight inflationary trend,” Mr Varian said. He attributed the rise in the UK GPI to the weakness of sterling.

http://www.ft.com/cms/s/2/deeb985e-d55f-11df-8e86-00144feabdc0.html

Of course online shopping prices will give different results to regular shopping prises, it's still interesting to have a price index with current prices rather the usual lag.

suckslikeafox

Interesting alright but given the amount of argument there is over CPI v HCPI etc, I'd be interested to see what economists make of this.

Also be interesting to see exactly how people are able to decipher Google's algorithms and see what the index is composed of, doesn't seem like it will be the most transparent thing in the world.

Anonymous1987

This paper gives the methodolgy pretty transparently, alas I skipped over time series in my coursework so I've some reading to do before I understand it. Looks straight forward though.

There will be plenty of debate about its validity but its sure to give greater insight if only as a compliment to the CPI.