Google has created a new inflation measure — the Google Price Index — based on the cost of goods sold online which could prove more accurate and up-to-date than official statistics.
Google’s mountain of web shopping data could also be used by the online group for economic forecasting ahead of the publication of official statistics, the Financial Times reported.
Google’s chief economist Hal Varian said that he is working on “predicting the present” by using real-time search data to forecast official figures which often are published at least a month after the period they cover.
For example, the search results for “unemployment insurance” could forecast actual claims for unemployment insurance, and be used as an alternative measure for the unemployment rate.
Varian was speaking at the National Association of Business Economists conference in Denver, Colorado. He added that the GPI was a new concept and that Google had not decided whether to publish it.
He said since Christmas, GPI shows a “very clear deflationary trend” for web-traded goods in the US. America’s ‘core’ CPI — the consumer price index official inflation rate which excludes food and energy — rose 0.9 per cent in the year to August. “It’s a quite different picture if you go to the UK where you see a slight inflationary trend,” Varian said.