Straits Times: Thu, Oct 27
A NEW index that uses online sales data to measure price rises will be launched next year.
The sales figures will be collected and converted into the index in around three days, giving economists, public institutions and the private sector an up-to-date snapshot of the retail sector.
Professor Roberto Rigobon, who helped found the process, told a media briefing on Tuesday that the index, many versions of which are already in use overseas, is uncannily similar to official inflation data.
'In Singapore, the level of accuracy is down to three decimal points,' he said.
Price data from Singapore has been compiled since last year, and the index will be released in the middle of next year.
Prof Rigobon, who is based at the Massachusetts Institute of Technology (MIT), noted that unlike the official inflation data, his price tracker does not take into account services like health care.
'While there are limitations on access to the cost of education, health care and real estate, the trends (as shown by the price indices) should be closely related to the official inflation data,' he said.
One surprising finding is that even in emerging markets, where online retailers are not a dime a dozen, the data collection is still an extremely accurate indicator of a country's inflation.
Prof Rigobon cited Ghana, which has only two online retailers. 'In poorer countries where there is less activity online, the closer our index tracks inflation, because the pricing systems are less sophisticated. The online prices are a function of the prices in store,' he added.
The approach to the index began in 2007 as a research project by Prof Rigobon and fellow MIT professor Alberto Cavallo.
They tracked and collated the prices of millions of items sold by online retailers in the United States, and then converted the numbers into indices that have a lag of only three business days.
Earlier this year, they entered into a partnership with financial services provider State Street Global Markets to form a venture called PriceStats. Data is now supplied to countries such as the US, Britain, Germany and France.
Martin Koh/ Sherry Tang