Is inflation higher than official figures?
Academic research suggests that official CPI figures in the post-pandemic era have not been an accurate reflection of consumer prices. We summarise key findings from a recent study and outline the alternative data sources that can help build a more accurate gauge of inflation.
In this literature review, we discuss the working paper, Inflation with Covid Consumption Baskets by Alberto Cavallo – co-founder of MIT’s Billion Prices Project. The study was first published in June 2020.
The pandemic has changed consumer expenditure patterns. The evidence suggests that these changes have led to significant biases in the way that official CPI figures are calculated.