posted on 20 March 2016
January/February 2016 Adobe Digital Price Index Shows Food Costs Rising Faster Than Shown In The Consumer Price Index
Adobe's new Digital Economy Project rolled out this past week with the objective of more accurate analysis of inflation in the USA.
From the authors of this index:
The DPI launches with the analysis of two important consumer goods segments - electronics and groceries. Findings include:
In addition, Adobe produces Job Seeking & Digital Housing Indices:
About the Adobe DPI
This is a digital-centric analysis based on real-time access to price-paid data and actual quantities sold. Seven dollars and fifty cents out of every 10 dollars spent online with the top 500 U.S. retailers go through Adobe Marketing Cloud. The DPI is based on the analysis of aggregated and anonymous data of eight billion U.S. website visits and 1.4 million products from January 2015 through February 2016.
Adobe Digital Index leverages the Fisher Ideal Price method, which uses actual quantities purchased to measure inflation and is recognized by leading economists as the gold standard for the calculation of inflation. No other organization can use the Fisher Ideal Price method today because they do not have enough data or sufficiently timely data to make these calculations. With the Fisher Ideal Price method, the DPI is able to take into account that online shoppers find better prices from a competing or substitute product if the price of an item suddenly increases. In addition, because the DPI measures quantities and does so in real- time, Adobe Digital Index is able to accurately capture the effect of major discount holidays like Black Friday and Cyber Monday.
Two world-renowned economists -- Austan Goolsbee, professor of economics at The University of Chicago's Booth School of Business and former chairman of the Council of Economic Advisers for President Obama, and Pete Klenow, professor, department of economics at Stanford University -- are partnering with Adobe on the DPI.
By analyzing billions of digital transactions of nearly one and a half million products sold online, the DPI addresses deficiencies in traditional inflation reporting. While the DPI does not cover offline purchases like gasoline, it tracks digital transactions more accurately than any other current source. The official Consumer Price Index (CPI) compiled by the U.S. Bureau of Labor Statistics (BLS) for instance, must rely on consumer surveys to approximate the actual sales of each product category purchased by consumers. The DPI uses transaction data on the actual quantities purchased for, literally, millions of products and captures the data in real time.
Caveats Relating To This Index
As this is a new index, it has not been tested over time.
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