We invite you to read the new article on Ideas de Peso, a blog where economists working in the BCRA share their opinions:
Retail sales—both in supermarkets and in shopping malls—are a partial indicator of the performance of private consumption.
Retail sales performance may be analyzed based on its nominal evolution—turnover in pesos—or, what is more relevant, on its dynamics in real terms. This means, deflating current values by a given price index (i.e., removing the effect resulting from price changes) to determine if sales rose or fell.
Another important aspect to bear in mind here is to determine the most relevant index to deflate nominal series, given that we could reach different results, especially in contexts exhibiting changes in relative prices. Likewise, it is a must to analyze such items that make up the index of deflation before making a decision. In the case of a set of goods and services that agrees with the basket used for calculating the consumer price index, the most appropriate index to be used as deflator should be the CPI general level. In turn, if the nominal series to be deflated matches a subset of items of the CPI basket, a specific deflator should be created.
For more information click here.
May 2, 2017