by Alberto Cavallo
EonoFact
The Issue:
Inflation rates are among the most closely watched economic statistics, but, as with many statistics that attempt to capture what is happening throughout the economy, aggregate measures mask important particulars. Measuring inflation requires simplifying assumptions about the basket of goods that a typical consumer purchases in a given month as well as eliding demographic differences and distinctions within product categories. Looking closely at prices within disaggregated product groups and using high-frequency online price data helps to reveal the nuances underneath monthly inflation numbers and how the experience of rising prices differs across groups of people.