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Research Agenda: Exploring Innovations in Technology and Data Sources for PPP Measurement

Exploring Innovations in Technology and Data Sources for PPP Measurement

This is the last of the topics that deserves serious consideration. The current approach to price collection in the participating countries is based on standard survey approach used in the CPI compilation. Prices are collected from various outlets in different locations and then averaged and used in the computation of basic heading PPPs.

The world is witnessing a major technological revolution which is influencing both by the way consumers purchase goods and services, and also the availability of large scale databases with information on prices and quantities associated with each transaction recorded at the point of sale. Scanner data are increasingly available and are now being considered by national statistical offices in their CPI compilation methodologies. Given that internet shopping and the use of services like Uber are becoming popular, prices from supermarkets and standard taxi fares may not provide reliable estimates of price level differences.

There is scope and need to modernize ICP and it is important to develop a vision as to how ICP will be implemented in five or ten years. Availability of scanner data, possibility of collecting prices through web-scraping, use of portable devices that can record the location and also make it possible to record product characteristics at the time of price collection, crowdsourcing of price data collection, etc. offer a range of alternative sources that need to be explored in future ICP cycles.

The World Bank undertook pilot projects to capture price data using crowdsourcing and smart phones. The basic concept is to have a network of price collectors across each country collecting prices, and recording observation place and date, along with some additional information. The following need to be investigated:

  • Assess the quality of the prices from alternative sources using standard ICP data validation methods; and
  • Compare price levels and dynamics between CPI and ICP price collections with the alternative sources.