The U.S. federal government has long been accused of fudging its consumer price index (CPI) to show more or less growth or decline in prices, depending on political expediencies of the moment. Perhaps this new Google price index will help keep our government a bit more honest. Reported in the Financial Times via CNBC:
Google is using 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.
The work by Google’s chief economist, Hal Varian, highlights how economic data can be gathered far more rapidly using online sources. The official Consumer Price Index data are collected by hand from shops, and only published monthly with a time lag of several weeks.
At the National Association of Business Economists conference in Denver, Colorado, Mr Varian said that the GPI was a work in progress and Google had not yet decided whether to publish it.