Google chief economist Hal Variant revealed the search giant has used its massive database of online data to create the "Google Price Index" (GPI). The advantage of this index is that it provides a real-time measure of inflation while the government's official CPI has a time lag of several weeks, but Variant acknowledges that the GPI isn't perfect because it's primarily tracking web-traded goods and Google is still undecided whether to publish it. According to Variant, the GPI shows a very clear deflationary trend for web-traded goods in the US since Christmas, while the UK is seeing a slight inflationary trend.
While the Federal Reserve is unlikely to panic just yet, Mr Varian said that the GPI shows a “very clear deflationary trend” for web-traded goods in the US since Christmas. Although the data are not seasonally adjusted, Mr Varian said that prices rose during the same period a year ago. The ‘core’ CPI in the US, which excludes food and energy, rose 0.9 per cent on a year ago in August.
“It’s a quite different picture if you go to the UK where you see a slight inflationary trend,” Mr Varian said. He attributed the rise in the UK GPI to the weakness of sterling.