Inflation with Covid Consumption Baskets

Alberto Cavallo

No 27352, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The Covid-19 Pandemic has led to changes in consumer expenditure patterns that can introduce significant bias in the measurement of inflation. I use data collected from credit and debit transactions in the US to update the official basket weights and estimate the impact on the Consumer Price Index (CPI). I find that the Covid inflation rate is higher than the official CPI in the US, for both headline and core indices. I also find similar results with Covid baskets in 10 out of 16 additional countries. The difference is significant and growing over time, as social-distancing rules and behaviors are making consumers spend relatively more on food and other categories with rising inflation, and relatively less on transportation and other categories experiencing significant deflation.

JEL-codes: C43 E21 E31 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-mac
Note: IFM ME
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Citations: View citations in EconPapers (89)

Published as Alberto Cavallo, 2024. "Inflation with Covid Consumption Baskets," IMF Economic Review, vol 72(2), pages 902-917.

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Journal Article: Inflation with Covid Consumption Baskets (2024)
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