Real-Time Inflation Launch!
Building our daily CPI system
We’re excited to announce the launch of our daily US inflation index!
Building our real-time inflation system
We’ve spent the past year building out our infrastructure, doing the heavy lifting of vetting our data gathering, normalization, and aggregation processes, to construct a system that produces reliable real-time inflation measures.
The final product is a beautiful set of indexes (if we do say so…) that track inflation on a daily basis — allowing us to see pricing dynamics within and across sectors, how cost and demand shocks are playing out across the economy in real time, and so on.
While we use the BLS’s item definition, weighting, and aggregation processes to build the indexes (as well as their seasonal factors in our seasonally-adjusted indexes) we don’t expect them to match the official CPI releases exactly. Our goal is to use a different sample than the data collected by CPI inspectors—i.e. online prices collected primarily from multiple-channel retailers (those with both an online and a brick-and-mortar presence)—to try to capture the same elusive measure the BLS is after, rises in the general price level.
We expect our price indexes will exhibit the same dynamics as the official indexes over time — though observed at a much higher frequency. Our data are pretty timely — we observe our daily inflation measures 24 hours after collecting the underlying price data.
Our data also have amazing breadth — we observe inflation at the item, sector, and overall economy level. As we’ll walk through over the next few weeks, for some items (official BLS-speak: ‘Expenditure level items’ or ELIs), we find our indexes match the official releases almost exactly. For others, our price samples, and so inflation indexes, diverge from the BLS’s sample — and in these cases we’ll explore how they differ and why.
We’re agnostic as to where inflation is headed — up or down. Our goal is to stick close to the data, and see where it leads. These are very interesting times to be a macroeconomist, and the drivers of our current elevated inflation have never been seen before historically. None of us know how inflation will evolve over the next few years as supply chains unsnarl (or not), the war in Ukraine abates (or not), and Covid relents to allow normal patterns of supply and demand to reemerge across markets (or not). Our goal is to gather and share higher-frequency price data to observe some of this evolution in real time, and to use in macroeconomic models that require greater statistical power than official data provides. In the fullness of time, and if of interest, we’ll also share some of our models for how inflation can be a powerful predictor of market movements.
We always welcome any thoughts or comments on our work.