Friday, October 15, 2010

The Google Price Index

For those disappointed they will received a 0% cost of living increase from social security this year and suspicious the government in understating CPI, Google plans to use its vast database of web shopping data to construct the ‘Google Price Index’ – a daily measure of inflation that could one day provide an alternative to official statistics. Official CPI data are collected by hand from shops, and published monthly with a time lag of several weeks. The GPI (Google Price Index) is still a work in progress, but shows a very clear deflationary trend since Christmas. I don't know what comprises the index, but my guess is electronics are overweighted. I wish I could see that deflationary trend in the grocery store, and hope the GPI will eventually include seasonally adjusted food and gas prices.
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2 comments:

  1. AndrewOctober 15, 2010 at 2:39 AM

    Interesting. I make use the Producer Price Index index in some aspects of my work, but the CPI is a bit suspect. I completely agree that this deflation that we keep hearing is not reflected in grocery stores. Probably the difference between needs (inflations) and wants (deflation).

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  2. DIY InvestorOctober 15, 2010 at 4:33 AM

    Interesting. How will it it be weighted? The CPI uses the Consumer Expenditure Survey.

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