The Internet Might Be Keeping Inflation Low

Austan Goolsbee and Peter Klenow have taken a crack at estimating e-inflation: the inflation rate of items bought online compared to those bought offline. They make use of the Adobe Analytics dataset to calculate a Digital Price Index (DPI) and then compare it to a matched set of items from the normal CPI basket of goods. Here’s the result, with ordinary CPI-U overlaid on their chart:

As you can see, they calculate that DPI is quite a bit lower than the matched CPI: about four points lower over the course of nearly four years. However, the fact that the basket of goods happens to be one that’s been deflating over the past four years makes me wonder if it’s really representative of overall inflation. If it is, then overall e-inflation has been about four points lower than CPI-U. If not, then who knows?

This is above my pay grade, but here are a couple of interesting charts from their paper. First of all, there’s one category where buying online apparently doesn’t help. Can you guess what it is?

Good ol’ health care. Apparently prices rise faster online than offline for medical supplies. Yeesh. But in the news-you-can-use category, check out recreational goods:

Every year, like clockwork, there’s a sudden drop in November. So if you’re looking for a good deal on sleeping bags or canoes, buy online in November. You’re welcome.

HERE ARE THE FACTS:

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ONE MORE QUICK THING:

Our fall fundraising drive is off to a rough start, and we very much need to raise $250,000 in the next couple of weeks. If you value the journalism you get from Mother Jones, please help us do it with a donation today.

As we wrote over the summer, traffic has been down at Mother Jones and a lot of sites with many people thinking news is less important now that Donald Trump is no longer president. But if you're reading this, you're not one of those people, and we're hoping we can rally support from folks like you who really get why our reporting matters right now. And that's how it's always worked: For 45 years now, a relatively small group of readers (compared to everyone we reach) who pitch in from time to time has allowed Mother Jones to do the type of journalism the moment demands and keep it free for everyone else.

Please pitch in with a donation during our fall fundraising drive if you can. We can't afford to come up short, and there's still a long way to go by November 5.

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