A small news item (via FT Alphaville) that is certain to create some much larger waves amongst the official government providers of Consumer Price Indices – more commonly known as the ones which do not relate to anyone’s version of reality.

Google is using its vast database of web shopping data to construct the ‘Google Price Index’ – a daily measure of inflation that could one day provide an alternative to official statistics. The work by Google’s chief economist, Hal Varian, highlights how economic data can be gathered far more rapidly using online sources. The official Consumer Price Index data are collected by hand from shops, and only published monthly with a time lag of several weeks.

A very interesting development in my opinion and one which will hopefully move from research to real time availability very soon (emphasis mine) :

Google is still deciding whether to go live with the product. However, the FT does provide some initial findings from the data series to give prospective index-watchers a flavour of the developments it’s tracking.

In the US, for example, the index has been registering a “very clear deflationary trend” for web-traded goods since about last Christmas. In the UK, though, the index has been showing a “slight inflationary trend”.

No surprises with the last sentence there though unfortunately.