COVID-19 and the CPI: Is Inflation Underestimated?
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Summary:
COVID-19 changed consumers’ spending patterns, making the CPI weights suddenly obsolete. In most regions, adjusting the CPI weights to account for the changes in spending patterns increases the estimate of inflation over the early months of the pandemic. Under-weighting of rising food prices and over-weighting of falling transport prices are the main causes of the underestimation of inflation. Updated CPI weights should be developed as soon as is feasible, but flux in spending patterns during the pandemic complicates the development as quickly as 2021 of weights that represent post-pandemic spending patterns.
Series:
Working Paper No. 2020/224
Subject:
Consumer price indexes COVID-19 Health Housing Inflation National accounts Prices Transportation
Frequency:
regular
English
Publication Date:
November 5, 2020
ISBN/ISSN:
9781513560281/1018-5941
Stock No:
WPIEA2020224
Pages:
30
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