Weighting bias and inflation in the time of COVID-19: evidence from Swiss transaction data
- Journal Article
Rights / licenseCreative Commons Attribution 4.0 International
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. Show more
Journal / seriesSwiss Journal of Economics and Statistics
Pages / Article No.
SubjectInflation; Consumption expenditure; Card transaction data; High-frequency data; COVID-19
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