This new price data will gathered in a process known as “web scraping”
Original story on The Telegraph
The UK’s official number crunchers are transforming their data gathering in order to measure the “Amazon effect” on the prices of goods and services.
No longer just based on a traditional “shopping basket”, official figures on price rises will soon take account of the nation’s online shopping habits, measuring the sales of millions of items such as clothing, flights and package holidays.
The rise and fall of prices of some 700 goods and services in more than 20,000 UK stores are already part of the Office for National Statistics’ (ONS) effort to calculate inflation.
Now, in a major drive to ensure statistics keep pace with changing consumer behaviour, the ONS has started preparing to include swathes of online price tags.
Internet retailers now account for more than 20pc of the UK market and, according to the ONS, online prices are often volatile, changing more regularly than in bricks and mortar stores.
Some 750,000 prices will be collected each week from 30 different retailers covering 80 different kinds of products as part of an “ambitious strategy” to transform the way the collects and publishes data.
After a research period, figures on internet shopping will be incorporated into the official Consumer Prices Index measure of inflation.
The goods put in this“shopping basket” of prices are already updated each year in spring in order to keep up with consumer trends. In March this year, for instance, pork pies and instant mash potato were ditched, and raspberries and gym clothing added.
This new price data will gathered in a process known as “web scraping” by price comparison website mySupermarket on behalf of the ONS. Quality control will be carried out by Kantar TNS, the firm which has monitored in-store prices for the official inflation figures since 1994.
Other innovations are in the pipeline, with statisticians examining the potential of gathering prices straight from checkout scanners in shops.
Mike Hardie of the ONS told The Telegraph: “This new technology will allow us to collect more online prices and much more quickly than we currently can. The crucial work will help ensure our inflation figures are able to fully reflect fast changing online pricing, ensuring they remain robust in this increasingly digital time.”
This is not the ONS’ only effort to make sure its data gathering keeps pace with a dynamic economy. A first of its kind collaboration with credit ratings agency Equifax was announced in May. This move has enabled number crunchers to access aggregate and anonymised bank account data, in order to closely watch how money moves through the economy. This is part of a project called the Flow of Funds Initiative, set up by the the ONS and Bank of England in the wake of the financial crisis in a bid to stop regulators being blind sided by pockets of risk in business or consumer credit.
This also followed the incorporation of real time tax data from HMRC in calculations of earnings growth, another important factor for policymakers to consider when they set interest rates.