THE BILLION PRICE PROJECT.

THE BILLION PRICE PROJECT. This is the web site of the Billion Price Project, which estimates inflation on a daily basis in 70 countries. The project collects sales prices from hundreds of online retailers for some 5 million products. (There is little coverage of prices of services). In contrast with the consumer price index, there is no effort at obtaining a random sample. Apparently all the millions of prices collected are used in the estimates. It is comforting that the price indexes from the Billion Prices Project roughly track the official consumer price indexes. However, this article by James Surowiecki in the May 30 New Yorker says that the BPP index showed almost immediately the decline in prices in the economy after the bankruptcy of Lehman Brothers in September 2008. The government price indexes didn’t show the decline until November. This article in the Economist (June 25) says that the BPP index shows the decline in prices of bean sprouts in Germany after the e coli outbreak caused by sprouts. I am astounded that the price of bean sprouts never dropped by more than 10% from the price before the outbreak. No discount would have been enough to get me to buy sprouts at that time.