Google is constructing a price index

by on October 12, 2010 at 9:54 am in Data Source, Economics, Web/Tech | Permalink

Google is using its vast database of web shopping data to construct the ‘Google Price Index’ – a daily measure of inflation that could one day provide an alternative to official statistics.

Google has not yet decided whether it will publish its index, but "Mr Varian said that the GPI shows a “very clear deflationary trend” for web-traded goods in the US since Christmas."

The full article is here, including the story of Hal Varian's pepper grinder and for the pointer I thank Brent Depperschmidt.

1 Ryan October 12, 2010 at 6:24 am

I have been wondering for years why similar things don't already exist. The AirMiles company, for example, could have been doing this years ago. There is simply no reason to rely on government economic statistics when point-of-sale data is readily available.

2 anon October 12, 2010 at 6:49 am

one problem with google shopping i've noticed is many retailers cheat the google price listing(google lists the price as lower than it actually is and sometimes matches another products price with another product). might have an effect?

3 Steve C. October 12, 2010 at 6:55 am

Yawn. So consumers benefit from deflation for goods you can purchase at Amazon et al. That's a great headline for the Wall Street Journal or Fortune. Every day consumers are introduced to the notion that Ipods are cheaper and food and gasoline are more expensive. Is it any wonder that consumers are skeptical about headline inflation? My mom is just ecstatic that her Social Security dollars buy less medical care, food and fuel. Not to mention that her bank is paying 1% on her CDs.

4 Right Wing-nut October 12, 2010 at 9:15 am

The problem with the GPI is lack of transparency. We can argue over the CPI because we know what it is. In order for Goog to justify its number, it would have to reveal a LOT about itself. And unlike the rest of us, Goog knows what this is worth.

5 Josh October 12, 2010 at 9:38 am

Google should make the details of their GPI available for purchase. Then we could track that with a Google Price Index Index.

6 Mladen October 12, 2010 at 1:02 pm

Did you know that there is already a price index created by ex-Google software engineer available at website wwwnumbeo.com? It's crowedsourced like wikipedia. It might be interesting to your readers as well.

7 Mladen October 12, 2010 at 1:03 pm

Did you know that there is already a price index created by ex-Google software engineer available at website http://www.numbeo.com? It's crowedsourced like wikipedia. It might be interesting to your readers as well.

8 V.H. October 13, 2010 at 9:18 am

I want "old people" and "middle age" and "teenager" CPI's as well.

9 Matthew January 22, 2011 at 3:41 am

I understood that Google’s price index can potentially gather economic data much quicker from the web. Varian said that the company has no plans to publish its price index yet and is not meant to be a direct replacement for the CPI, but did reveal that it currently shows a deflationary trend for web-traded goods in the USPhoenix Web Design

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