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Google Price Index


JEast
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As many of us agree that the US 'CPI' is somewhat suspect, there is new competition coming soon.  The Google Price Index by Google's chief economist will be publishing their website data with which you can compare.  "Mr Varian said that the GPI shows a “very clear deflationary trend” for web-traded goods in the US since Christmas."  I guess the bond market already, or was, expecting this.

 

http://www.cnbc.com/id/39626164

 

 

Cheers

JEast

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Let me see if I have this straight:

 

ShadowStats has "proven" that the CPI understates inflation.

Google has stated that in the online world the CPI has overstated inflation

 

Not exactly a apples to apples comparison because of Google's focus on the online world but still it add more impetus to question all three measures and not take any of them as gospel.

 

Seth

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I am sure most have known for sometime that the US CPI understates their computation of inflation and all would tend to agree with ShadowStats.  However, I believe the question on the table is, 'are we measuring the right things'?  That is we all have opportunity costs and can change our behavior.  Take the bus when gas gets to $4US, change to a cheaper brand, or go to Wal-mart versus Target. 

 

Do we have agriculture inflation currently.  Sure, but is that a weather issue (i.e. Russia).  Plus, other inputs to agriculture are not inflating and now appear to be a wash when the final product hits the store.  I stopped by a Wal-mart super center as it recently opened.  Bananas were 0.49lb.  Teaser rate probably, but when you can ship bananas from Ecuador and include transportation, distribution, and the lot and still make a penny a pound - we live in a wonderful time.

 

 

Cheers

JEast

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Neither index is completely accurate. 

 

Google's excludes raw material costs, etc.  It will give a pretty good idea of end product inflation or deflation...thus it would be a lagging indicator to inflationary or deflationary costs at the producer/wholesale level.  Cheers!

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