Weighting bias and inflation in the time of COVID-19: evidence from Swiss transaction data

Pascal Seiler

Swiss Journal of Economics and Statistics, 2020, vol. 156, issue 1, 1-11

Abstract: Abstract Sharp changes in consumer expenditure may bias inflation during the COVID-19 pandemic. Using public data from debit card transactions, I quantify these changes in consumer spending, update CPI basket weights and construct an alternative price index to measure the effect of the COVID-induced weighting bias on the Swiss consumer price index. I find that inflation was higher during the lock-down than suggested by CPI inflation. The annual inflation rate of the COVID price index was −0.4% by April 2020, compared to −1.1% of the equivalent CPI. Persistent “low-touch” consumer behavior can further lead to inflation being underestimated by more than a quarter of a percentage point until the end of 2020.

Keywords: Inflation; Consumption expenditure; Card transaction data; High-frequency data; COVID-19 (search for similar items in EconPapers)
JEL-codes: C43 E21 E31 E37 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (24)

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DOI: 10.1186/s41937-020-00057-7

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