Indicators Derived From Unstructured Data Will Help Policymakers Better Track Retail Pricing, Consumer Demand Shifts Driven by Central Bank Policy and the Ukraine War
State Street Corporation (NYSE:STT) today announced that it will begin providing the PriceStats Global Food Inflation series to the public, on a complimentary basis, to help policymakers grapple with rapidly rising food prices and supply shortages driven by the war in Ukraine. State Street also announced that it will continue to offer the full suite of State Street PriceStats Series, a comprehensive suite of indicators to monitor trends in retailer pricing and consumer demand in 22 countries, to central banks around the world on a complimentary basis. The data was initially provided to central banks in early 2020 following an influx of inquiries from central banks as they sought to mitigate the negative economic effects of the pandemic. The indicators have been made available to 16 central banks via State Street’s Insights research platform over the past two years.
“Real-time inflation metrics have proved invaluable during what has been the fastest economic cycle on record. They were quick to capture the swoon in prices as demand collapsed, but also the rapid, and more importantly persistent, recovery in elevated goods prices that has characterized the surge in inflation since. These trends have continued into 2022, but the added shock of the war in Ukraine means monitoring the rate of pass through of higher commodities prices, into consumer fuel and food prices is now a priority,” said Michael Metcalfe, head of Macro Strategy, State Street Global Markets.
The indicators, which are created by Price Stats, LLC through its exclusive partnership with State Street, track daily price fluctuations in millions of consumer products sold by hundreds of online retailers around the world. This information is synthesized using econometric algorithms to produce high-frequency consumer price indices that help our clients monitor trends in inflation. Because many retailers adjust prices in real-time based on consumer purchasing patterns, the data can also offer insights into consumer demand in the real economy.
“The acceleration in food inflation and renewed supply disruptions continue to put upward pressure on prices. It is unclear how long these pressures will last, making it all the more important for policymakers to understand the current real-time dynamics of price trends,” commented Alberto Cavallo, the Edgerley Family Associate Professor of Business Administration at the Harvard Business School and co-founder of PriceStats. “We are happy to be able to provide these indices to help support decision making and policy formation in these difficult times.”
Examining the drivers of this trend in the U.S. economy, State Street observes that:
- Year-to-date food inflation is currently on pace for a 12% annualized rate;
- The previous maximum 4-month annualized rate for food inflation since PriceStats began collecting data until the start of the pandemic was 7%;
- Every month in 2022 has seen food inflation surpass previous historical highs seen for that particular month.
The State Street PriceStats indicators build on the capabilities of State Street’s academic thinktank, State Street Associates. State Street Associates bridges the worlds of financial theory and practice, develops proprietary investment indicators, differentiated analytics applications and tailored investment strategies for institutional investors around the world. The series can be accessed via State Street’s Insights research platform, here.
About State Street
State Street Corporation (NYSE: STT) is one of the world’s leading providers of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $41.7 trillion in assets under custody and/or administration and $4.0 trillion* in assets under management as of March 31, 2022, State Street operates globally in more than 100 geographic markets and employs approximately 39,000 worldwide. For more information, visit State Street’s website at www.statestreet.com.
*Assets under management as of March 31, 2022 includes approximately $73 billion of assets with respect to SPDR® products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated.
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