Miles and guests unpack how the ONS is collecting the prices from more than a billion supermarket checkout and online sales to measure UK inflation. Transcript Scanner data podcast transcript Miles: Hello and welcome to statistically speaking, the official podcast of the UK's Office for National Statistics. I'm Miles Fletcher, and in this episode, we're taking an in depth look at a very big change in how the ONS produces its estimates of inflation, no longer the sole preserve of clipboard wielding prices collectors roaming the supermarket aisles. The digital revolution has now fully arrived. From this month, the UK's inflation indices are now partly based on millions of prices data gathered directly from the tills or scanners, to be precise. How is it all done? What is the role of Taylor Swift in all this? Yes, there is one. And what are the benefits for economists, decision makers and all of us ordinary folk who worry about the cost of living. Here to unpack it all for us is Mike Hardy, who has led the project here at the ONS, and top economist and former member of the Bank of England Monetary Policy Committee, Jonathan Haskel, professor of economics at Imperial College London. Professor to start with you: to understand what's changed, it'd probably be helpful to remind ourselves how consumer prices inflation has until now been calculated. Essentially, it was the ONS and its agents checking the prices of 1000s of items on a monthly basis to see how they changed. Jonathan: Yeah, that's right, and the ONS has gone to an enormous amount of effort in order to make that collection representative and make it consistent. But of course, in the modern era of scanner, data, computers, e commerce, things like that, there are other ways of doing it. I guess the important point, which Mike can talk about some more, is that one of the things that we know from statistics is that having a big sample isn't necessarily going to be better if you have a representative sample to start with. So I think one of the interesting points about all of this is whilst the scanner data is collecting many more data points, it's a fascinating check on the representativeness or otherwise of the ONS survey and the procedures thus far as to whether the actual average of all of that will turn out to be very different or similar to what's done before. It's a great advantage to have all of this extra data, but one shouldn't overstate either the advantage or use it as a way of rubbishing what the ONS has been doing in the past. Miles: So to put it this way, perhaps then, what the ONS has traditionally been doing in collecting prices, is to take this big monthly snapshot of retailing and prices, and what people have been paying for items. What it's got now, what it's moving to in the digital age is moving from a still picture, perhaps to a rolling 4k video, and from that, it can find out exactly what has been missed out of the inflation calculations previously. Jonathan: Well, I'll just put a little bit of a spin on that. One of the things that the price collectors do, and they're very, very careful to do, is to make sure that that snapshot is consistent across the snapshots, if you sort of see what I mean. So there is a bit of a rolling element to those snapshots already, because, for example, if you're going to collect the price of, let us say, Ladies jeans, which is something that I was doing with the price collector recently, you want to be sure you collect the price for the same good over time. And the point about the price collectors is they're extremely conscientious about making sure that, in the case of ladies jeans, they are coloured blue. They've got either a flared leg or not a flared leg. They've got the same number of pockets, they've got the same amount of stitching, they've got different decorations on them. To make sure that those goods remain the same is actually very important, and that's something actually which the hand collection can do. And as I say, I think that means that the snapshot element is maybe not quite the right metaphor, if I may say, miles. It is the relation. It's a consistent element over time, a consistent snapshot if that's using a metaphor Miles: That said it's more than just blindly following the same list of products every month. But nonetheless, the traditional way of doing things has had significant. What do you think those are? Jonathan: I guess the limitations are that when one is collecting a sample, any kind of sample at all, one is always doing one's best to try to hope that that's a representative sample, and having more data then is going to help if it turns out that the sample is unrepresentative. So I think that's one part of it. I think the other part of it is, of course, it's becoming increasingly costly to hand collect these numbers, and you know, like any public agency, one wants to be as careful as one possibly can with taxpayers money. ...
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