Billion Prices Project Provides Real-Time Alternative to Consumer Price Index

Anyone concerned about inflation and inflation risk should take a look at the Billion Prices Project -- a set of real-time inflation indexes that provide an important alternative to the consumer price index (CPI).

The BPP databases show prices in the United States soaring at a rate well above what is indicated by the CPI.  This decoupling has been especially evident over the past several months.

The Billion Prices Project (BPP) was started in October 2007 by two professors at MIT’s Sloan School of Management.  The BPP databases track inflation trends for 5 million individual items in 70 countries.  The items tracked are merchandise or “goods” such as electronics, apparel and real estate—services are not tracked by the BPP.

Take a look at the variance between Argentina’s CPI estimates and those represented by BPP data to get a sense for the potential variance between official/headline inflation estimates and those provided by alternative data sources.