The Use of Scanner Data for Measuring Food Inflation

The food sector is being recognized as one of the most critical for reaching an accurate measure of inflation, since food items play a crucial role in consumer expenditure and, at the same time, the food market is very complex. This chapter provides a review of the literature on the use of high frequency scanner data for measuring the cost of living with a particular emphasis on food products. We highlight the major benefits and discuss the main challenges, such as: what are the effects of a time and spatial aggregation on the CPI calculation? What is the price index formula the scientific literature advises when using scanner data? In the second part of the chapter we investigate the effect of the use of high frequency data on the price index computation.