Title: Inflation with Covid consumption baskets
Authors: Alberto Cavallo - Harvard University (United States) [presenting]
Abstract: The Covid-19 Pandemic has led to changes in consumer expenditure patterns that can introduce significant bias in the measurement of CPI inflation. We use data collected from credit and debit transactions in the US to update the official basket weights. We find that the Covid inflation rate is higher for both headline and core CPIs, particularly for low-income households. We find similar results in 12 of 17 additional countries. The difference is growing over time as consumers spend relatively more on food and categories with rising inflation, and relatively less on transportation and categories experiencing significant deflation.