We have received a lot of emails regarding our index and what it implies for US inflation. In other words, is it time to panic or not? We are showing a lot of inflation in our retailers and the question is if this implies tomorrow the BLS is going to announce the end of the world as we know it.
Well, I will not answer that question directly. There are important things to remember, though. First, our index is not meant to predict the release the BLS does (and will do tomorrow at 8:30). Second, our index is based on online retailers, and the CPI is broader and has many sectors we cannot monitor online (yet!). Third, because we are protecting the companies from which we collect information we cannot reveal which retailers are included, nor the weights. Which makes our index less transparent, but until we incorporate more companies, we will keep it that way.
What does this mean? Our index, as presently constructed, is an “alternative” measure of US inflation, and if you are planning on trading — uniquely basing your decision on this index — I think you will be making a mistake. This is information that should be used as a complement to the macro models used in financial institutions. In other words, this is ONE additional piece of information (a useful and relevant one), but it is not THE ONLY piece of information.
We have constructed tracking indexes of the US CPI announcement, as well as those announcements in other developed economies. Those indexes are not published in this page. We are planning to construct those tracking indexes in as many countries as we can reliably construct them, and I promise we are trying to find a way to distribute that information so they can be used by all. I hope we can make the announcement soon – mid march possibly.
So, going back to the initial question, should we panic or not? well, I leave that to you. I hope the information we produce can allow you to make a better decision, but please, do not assume this index is a substitute for a formal decision process.