Economists are creating new methods for tracking prices.
At some 23,000 retailers and businesses in 90 U.S. cities, hundreds of government workers find and mark down prices on very precise products. And I’m not kidding when I say “very precise.”
Measuring inflation is a time-consuming business: at the beginning of each month, government researchers across the country amass troves of data on prices for everything from shoes to milk to phones. Two weeks after the end of the month, the government releases gauges of inflation like the Consumer Price Index. But inflation hunters may now get an advance glimpse of the data, thanks to a real-time inflation calculator devised by two economists at M.I.T., Alberto Cavallo and Roberto Rigobon.
The Billion Prices Project (BPP), an initiative started by a pair of alumni who are MIT Sloan School of Management professors, collects prices from hundreds of online retailers around the world on a daily basis to create an Internet-based resource that measures price changes from around the world and gives real-time inflation estimates.