Turning to food inflation, our data show some food prices that soared during the pandemic—e.g. beef steaks, bacon, and breakfast sausages—came down in April, while others affected by the war in Ukraine moved in the opposite direction as bakery and cereal products begin to pass-through soaring wheat prices upstream.

In the figures below, we show real-time inflation for a few items that have been pretty well behaved vs. the official data: ‘Uncooked beef steaks’ and ‘Bacon, breakfast sausages, and related items’.

In each figure, the line shows the 30-day percent change in the 30-day average of the item’s daily price index, and the numbers in the orange dots give the final real-time number for each month, with the official BLS release below.

The last daily March print in our “Food away from home” real-time inflation index was slightly below the official data at 0.2 percent with an April print of 0.07. This category includes both full- and limited-service meals and snacks.

A quick note that our real-time inflation indexes should be seen as just that, measures of changes in the general price level—as defined by a typical consumer basket of goods and services— and measured via online prices.

We have not constructed our real-time inflation indexes to be precise forecasts of each of the BLS’s CPI prints. In the future we may release a second set of models that titrate the online pricing dynamics we observe to the BLS’s largely offline sample—in which 87 percent of the transactions are from brick-and-mortar outlets.

In some posts, we do compare our inflation prints—with their fluid dynamics over the month—to the BLS’s single release each month, as we are each trying to measure the same underlying macro impulse. But a proper forecast of each BLS print would model more explicitly than we have (at least so far) the differences in online and offline pricing dynamics.

That said, a nice academic literature has found that online prices can be a representative source of brick-and-mortar retail prices, and some evidence that they anticipate offline prices and may—in volatile environments—respond faster to macroeconomic shocks.

As we’ve built our system over the past year, we’ve seen evidence that the dynamics of our online indexes anticipate those of offline indexes in most sectors. Our general prior is that the dynamics of our real-time CPIs will run ahead of each sector’s official CPI by several weeks to several months.

Enjoy the weekend! Our next post will be on Monday.