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Asia-Pacific Economic Statistics Week
Session IV
Improving the quality of price
statistics:
Monitoring consumer price trend
using daily price data of online
grocery stores in India
Anirban Sanyal
Reserve Bank of India
Asia-Pacific Economic Statistics Week
Content
I. Research question and scope of study
II. Literature review
III. Online grocery and e-retail
IV. Data used
V. Methodology
VI. Findings
VII. Remaining issues/further research
Asia-Pacific Economic Statistics Week
I. Research question & scope of study
• Food items drives consumer inflation in recent times
• Wt of food item in overall CPI: around 46%
Asia-Pacific Economic Statistics Week
I. Research question & scope of study Price stability - one of the major mandate of central banks across
countries
Major impediments
• Official estimates of CPI and WPI comes with a lag
• Drivers of inflation can be different
• High frequency data of these inflation drivers are rarely found
Objective of the paper
• To assess the viability of using daily price data from online grocery
stores to track retail inflation
• To check the degree of coherence at different item basket level
• Is there any possibility of divergence between the official estimates
and such price data
Asia-Pacific Economic Statistics Week
I. Research question & scope of study
Contribution of the paper
Identifying alternate data source
Policy implications as real time tracking of inflation
Identify adverse price shocks on drivers of inflation
First of its kind in Indian context
• Online grocery is only a step towards using high frequency data
• Other high frequency data can also be tried
• Spatial coverage and item basket coverage – major challenge
Asia-Pacific Economic Statistics Week
II. Literature review Authors Contribution
Cavallo (2010) Scraped Data and Prices in Macroeconomics.
(Ph.D Dissertation)
Cavallo and Ribogon
(2010)
Initiated project titled “MIT Billion Prices Project”
(BPP)
Cavallo (2013) "Online vs Official Price Indexes: Measuring
Argentina′s Inflation"
Cavallo and Ribogon
(2016)
The Billion Prices Project: Using Online Prices for
Measurement and Research
Cavallo (2016) Are Online and Offline Prices Similar? Evidence
from Large Multi-Channel Retailers
MIT Billion Prices Project
BPP covered over five million commodities sold across 300 online retail chains
in more than 70 different countries
Asia-Pacific Economic Statistics Week
III. Online grocery and its future
Survey report of Nielson (April, 2015)
• More than 80% of 30000 respondents across countries find it convenient
to order from online grocery stores.
• Asia-Pacific Region has been a leading region for adopting such online
initiatives in grocery market
Technology Preference
Access to Mobile internet
Application based hassle free ordering
Online grocery
• Major thrust in food and
beverage
Asia-Pacific Economic Statistics Week
III. Online grocery store in India
2011
• BigBasket
• ZopNow
2012
• LocalBana
ya.com
2013 2014
• Grofers
• Peppertap • Jugnoo
History of online grocery stores in India
Asia-Pacific Economic Statistics Week
III. Online grocery store: Prospect in
India
The food and grocery
industry in India is now
worth $383 billion and is
expected to touch $1
trillion by 2020 - Technopack
Asia-Pacific Economic Statistics Week
IV. Data used • daily price data from one of the major online grocery of India,
Bigbasket.com
• daily price of around 2200 commodities have been monitored over 5
months horizon (Apr-Aug 2015)
• The business operation of the aforesaid online grocery store has been
found to be restricted only to 5 major cities namely Hyderabad,
Bengaluru, Chennai, Mumbai and Pune.
Asia-Pacific Economic Statistics Week
IV. Data used
Item Code Unique identifier of each commodity which is maintained by
online grocery
Item
Description Description of the item
City City name
Sale Price Sale price quotation of commodities
MRP Maximum retail price
Asia-Pacific Economic Statistics Week
V. Methodology
• The items which does not have any reported price, has been excluded
from the analysis.
• MRP has been used as representative price quotation across commodities
• as the information on MRP is not available for Bengaluru, the sale price has
been used as proxy for MRP for Bengaluru only
Data cleansing and transformation
Mapping online grocery commodities to CPI item basket
876
702765
525614
Bangalore Hyderabad Mumbai Pune Chennai
No. o
f uni
que
com
mod
ities
offe
red
Asia-Pacific Economic Statistics Week
V. Methodology
CPI Items No. of items mapped
Palak and other leafy vegetables 260
other fresh fruits 257
other vegetables 254
gourd, pumpkin 161
mango 138
beans, barbati 94
apple 92
banana (no.) 72
onion 72
processed food 70
brinjal 64
tomato 55
Asia-Pacific Economic Statistics Week
V. Methodology
Construction of Index
City level index 𝐶𝑃𝐼𝑖𝑡𝑐𝑖𝑡𝑦
=𝑃𝑖𝑗𝑡
𝑐𝑖𝑡𝑦
𝑃𝑖𝑗0𝑐𝑖𝑡𝑦
× 100
𝐶𝑃𝐼𝑖𝑡𝑎𝑔𝑔𝑟
=1
𝑤𝑖𝑐𝐶
𝑐=1
× 𝑤𝑖𝑐× 𝐶𝑃𝐼𝑖𝑡
𝑐
𝐶
𝑐=1
Aggregate Index
Comparative analysis and deep-dive
• CPI item level indices are rebased at Apr-15=100 for comparative purpose
• The comparative analysis has been carried out using visual inspection
Asia-Pacific Economic Statistics Week
VI. Findings
• Co-movement in potato price but sharp increase during Jun-15 which is
not that high in official estimates
• Onion price which increased significantly during Jul-Aug 2015, is properly
captured by daily data
Asia-Pacific Economic Statistics Week
VI. Findings: Co-movement in price
Asia-Pacific Economic Statistics Week
VI. Findings: Divergence
94
96
98
100
102
104
106
108
110
112
114
80
100
120
140
160
180
200
220
Apr-15 May-15 Jun-15 Jul-15 Aug-15
Pappaya
CPI (Derived) Composite
• Divergence between official
estimates and daily data
observed in some fruits and
vegetables
Asia-Pacific Economic Statistics Week
VI. Findings: Deep dive
Spatial divergence
Asia-Pacific Economic Statistics Week
VI. Findings: Deep dive
Commodity basket: Mapping issues
CPI BigBasket
Ap
ple
Fresho Apple - Fuji Fresho Organically Grown - Apple
Fresho Apple - Royal Gala Fresho Apple - Queen
Fresho Apple - Washington Fresho Apple - Shimla
Fresho Apple - Green Fresho Apple - Golden Delicious
Fresho Apple - Kinnaur Fresho Apple - Granny Smith
Fresho Apple Fuji Premium Fresho Apple - Indian
Asia-Pacific Economic Statistics Week
VII. Remaining issues/further research
• The daily price data is able to track the price momentum across
commodities which matches with the official data
• Divergence in price momentum is also observed in certain commodities.
• The divergence of price momentum can be attributed to regional
coverage and items covered under these online services.
• Such divergence between online data and official estimates has also
been observed by Cavallo (2012)
• As these online groceries are spread out only in metro cities, the price
quoted in these online groceries are often representative of premium
quality of items.
Further scope includes extending the timeline of analysis along with
increasing coverage of the item basket by incorporating larger information set from other online groceries.
Asia-Pacific Economic Statistics Week
Thank You