Motivations and Goals

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Accurate price measurement is crucial for social welfare.

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Prices govern the purchasing power of households' wages and wealth and play an important role in the decision-making process of many institutions, such as central banks (monetary policy), local and national governments (welfare programs, public pension systems), labor unions (wage negotiations), firms (local wage compensation), as well as statistical offices and international organizations. Measuring aggregate prices (and their changes, i.e., inflation) accurately is thus of fundamental importance for appropriate decision making. Moreover, understanding the price-setting process is essential to properly gauge the response of prices to changes in policy or to new macroeconomic trends.

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The World Price Monitor provides improved price measures and a better understanding of price dynamics along several dimensions.​

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Thanks to very detailed scanner data it is possible to compute household-specific or region-specific prices indices, with accurate quality-adjustments. Moreover, price indices based on scanner data can be computed for countries where official price statistics are subject to suspicions of systematic misreporting. Additionally, scanner data allow differentiating between ``effective'' and ``recorded'' price inflation, i.e. price changes actually paid by households, in contrast with price changes observed for products that stay on the shelves in supermarkets. Finally, the rich set of available variables and observations makes it possible to study the determinants of the observed price dynamics across households and locations.