Price discounts and the measurement of inflation

Kevin Fox and Iqbal Syed ()

Journal of Econometrics, 2016, vol. 191, issue 2, 398-406

Abstract: Consumers are very responsive to sales, yet statistical agency practice typically under-weights sale prices in the Consumer Price Index (CPI). Evidence is lacking on the impact on the representativeness of prices included in the CPI and on estimates of inflation. Using high-frequency scanner data from US supermarkets we find that the exclusion of sales prices introduces a systematic but stable effect over time so inflation measurement is not significantly affected. We also find evidence that the typical practice of using data from an incomplete period in constructing unit values can lead to an upward bias in the resulting price index.

Keywords: Cost-of-living; CPI; Regular prices; Retail sales; RYGEKS; RYCCD; Scanner data (search for similar items in EconPapers)
JEL-codes: C43 E31 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Working Paper: Price Discounts and the Measurement of Inflation (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:econom:v:191:y:2016:i:2:p:398-406

DOI: 10.1016/j.jeconom.2015.12.010

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