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Pages 1-14

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From page 1...
... As these trends have 1 A00858 -- Consumer Price Index REV.indd 1 8/15/22 11:54 AM
From page 2...
... This summary highlights a subset of the panel's recommendations for modernizing BLS's CPI program. THE POTENTIAL OF ALTERNATIVE DATA FOR CONSTRUCTION OF ELEMENTARY INDEXES Point-of-sale data, household-generated home scanner data, and data scraped from the web are the primary "nontraditional" data sources that have been successfully exploited for price measurement.
From page 3...
... Next Steps To date, alternative data typically have been integrated incrementally within the existing CPI infrastructure when the opportunity has arisen or when pressure emerged to do so because of a problem with a conventional data source. Going forward, BLS will need to go beyond price quote replacement and make progress in areas where traditional data are still A00858 -- Consumer Price Index REV.indd 3 8/15/22 11:54 AM
From page 4...
... Embracing alternative data sources now, and moving forward aggressively with research for their integration, will ensure that the accuracy and timeliness of the CPI will not be compromised in the future. The data modernization strat egy will involve: • Identifying promising alternative data sources and then prioritizing the work needed to evaluate and incorporate these data into the items/strata where they can be applied; • Continuing development of a robust research agenda that supports incorporation of alternative data and associated new methodolo gies more broadly beyond just price quote replacement; • Continuing research assessing the quality of new types of data; • Developing staff expertise that includes more data scientists and other specialists; • Creating a cross-agency strategy for data acquisition with the pos sibility of joint contracts across statistical agencies; • Carrying out a strong communication strategy to inform stake­ holders of plans and implementation details.
From page 5...
... To improve the timeliness of the CPI and the accuracy with which it captures changing buying patterns, BLS must (1) update upper-level A00858 -- Consumer Price Index REV.indd 5 8/15/22 11:54 AM
From page 6...
... the national accounts. Given limitations of electronic transaction data to link information on prices and quantities to specific households -- and, in turn, to population subgroups -- research into use of alternative data sources for estimating upper-level weights should initially be directed toward production of the national-level CPI.
From page 7...
... For example, Statistics Canada (2021) published a special edition price index using credit and debit card data supplied by the Bank of Canada and alternative weights based on na tional accounts data "to account for pandemic related expenditure shifts at more detailed levels of geography and CPI components." Longer-Term Planning The strategy outlined above presumes that BLS will adopt a data ap proach for establishing upper-level expenditure weights that blends data from national accounts and private companies.
From page 8...
... BLS should continue using rental equivalence as the primary a­ pproach to estimating the price of housing services for owner-occupied units. The CPI methodology has traditionally relied on survey data to provide information on rent changes and housing expenditure shares.
From page 9...
... The direct approach involves estimating total health insurance premium prices; the ­indirect approach involves pricing health insurance using prices of medi cal care blended with information about retained earnings of insurance providers. The underlying logic of the indirect approach is to separate out the prices of medical care goods and services from the portion of insur ance premiums retained by insurance companies to cover administrative costs and profits.
From page 10...
... Supplemental Subgroup Price Indexes Price indexes and other economic statistics tailored to describe and track the experiences of specific population subgroups are a growing ­research and policy need. The rationale for producing price indexes for population subgroups is clear for purposes such as adjusting Social S­ ecurity benefits and marginal tax rates or for specifying transfer payments for which only certain groups are eligible.
From page 11...
... For this reason, the next generation of empiri cal studies on inflation inequality will need to draw on additional, alterna tive data sources -- perhaps most importantly, a household-based scanner recording program that captures prices, quantities, and item characteristics of purchases made by surveyed respondents. The above-described research linking individuals to their purchases strongly suggests the need for approaches that blend multiple data sources -- encompassing survey data that cover the full consumption basket, including item categories for which electronic transaction data are still incomplete, and commercial data sources that allow deep analyses of prices paid and product detail -- in a way that accounts for the full range of consumer expenditures.
From page 12...
... -- along with other statistical agencies that collect key economic data, such as the Department of Agriculture -- is needed to advance the acquisition and use of alternative data sources in the production of economic statistics. More specifically, such coordination will allow the statistical system to negotiate common, unified, comprehensive contracts with companies that collect ap plicable data.
From page 13...
... This includes advance notice of changes in an easy to find location on its website, detail about alternative data sources incorporated, transparency around experimental indexes, and updates on the timelines of projects as they evolve. A00858 -- Consumer Price Index REV.indd 13 8/15/22 11:54 AM
From page 14...
... A00858 -- Consumer Price Index REV.indd 14 8/15/22 11:54 AM


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