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

Pascal Seiler
Published in: Swiss journal of economics and statistics (2020)
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.
Keyphrases
  • coronavirus disease
  • sars cov
  • health information
  • electronic health record
  • healthcare
  • oxidative stress
  • high glucose
  • machine learning
  • social media
  • drug induced
  • data analysis