Online and official price indexes: Measuring Argentina's inflation

Prices collected from online retailers can be used to construct daily price indexes that complement official statistics. This paper studies their ability to match official inflation estimates in five Latin American countries, with a focus on Argentina, where official statistics have been heavily criticized in recent years. The data were collected between October 2007 and March 2011 from the largest supermarket in each country. In Brazil, Chile, Colombia, and Venezuela, online price indexes approximate both the level and main dynamics of official inflation. By contrast, Argentina's online inflation rate is nearly three times higher than the official estimate. ► The paper uses online prices to construct daily price indexes in five countries. ► Online indexes match the level and dynamics of inflation in Brazil, Chile, Colombia, and Venezuela. ► There is a large unexplained difference in the level of online and official inflation for Argentina. ► The best approximation to the official index is to use one-third of the inflation observed online.