Google uses Web shopping data to measure inflation

Google uses Web shopping data to measure inflation

Google is tapping its vast database of e-commerce figures to build a price index that will offer an alternative inflation measure to official statistics, according to the Financial Times.

The Google Price Index is being developed by the search giant's chief economist Hal Varian although no decision has been taken on whether to publish it.

Varian says that the GPI is not a replacement for the official Consumer Price Index data because the mix of goods sold online is different to that in the wider economy.

However, the Google offering has the advantage of immediacy over the CPI, which is published monthly with a time lag of several weeks.

The GPI shows a "very clear deflationary trend" for online traded goods in the US since Christmas, says Varian, who hit upon the idea for the index after searching for a pepper grinder on Google Shopping and being struck by the list of prices.

Google to map inflation using web data - FT (subscription)

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