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The Billion Prices Project - A Daily Estimate Of Inflation

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(Sadly, UK index is still being built, but it shows real time price inflation/deflation)

The Billion Prices Project - a daily estimate of inflation

Posted by Jim Leaviss on 11 February 2011 15:09:00 GMT

I came across this daily CPI estimate in a Bloomberg article this morning. Called the Billion Prices Project (BPP), it's run by two MIT academics and aggregates 5 million online prices on a daily basis. Whilst the basket of goods is always going to be somewhat different to that used in the official data, the trends that the BPP model picks up can give a real-time guide to the direction of inflation. For example in 2008, following the collapse of Lehman, the BPP started showing price falls within a week - the official US CPI data didn't reflect that prices were falling for another 2 months.

The charts to the left show the latest US readings - it's perhaps worrying to note a sigificant acceleration in prices in recent weeks - and the year on year numbers are showing 2.25% inflation on the BPP measure compared with 1.5% on the official Bureau of Labor Statistics numbers.

Sadly there is no UK model at the moment (it's being updated) - it would be very interesting to get a feeling for the pass through rates for January's VAT hike - did stores pre-hike VAT in December, wait until the 4th January, or most worrying, perhaps they have waited until the end of the sales and are implementing the hikes now?

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What an excellent idea. I look forward to seeing what the UK's real inflation is.

I'd like to see the data broken down into sector though. Food and clothes are the important ones I think, I'm not too fussed about prices of tellys or sofas.

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  • 312 Brexit, House prices and Summer 2020

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