You don’t trust your government to provide reliable inflation data? Is the central bank tinkering with the numbers to help the president get re-elected? The number crunchers at the Massachusetts Institute of Technology have come up with a way to keep them honest. MIT’s Billion Prices Project has constructed alternative consumer price indexes from a data-base of prices of 5 million individual items from super markets and other retailers in 70 countries.
The Argentine consumer price index says that inflation has been stuck around 11% a year since July? According to the Billion Price Project it’s running at an annual rate of nearly 21%. In the United States, too, the BPP suggests prices are rising faster than the Fed would have us believe: 2.2% a year compared to 1.1% reported by the CPI. That is good news. It suggest that growth might be faster than we think.
I thank Free Exchange for the pointer.