Senior woman websurfing on digital tablet
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As online shopping becomes increasingly common, accurately collecting consumer economic data is more challenging, Statistics Canada says.

In a new paper, the national statistical agency evaluated the impact of digital commerce on its efforts to measure consumer inflation.

The increasing prevalence of online shopping poses a growing challenge to economists because the prices that consumers pay aren’t nearly as stable online as they are in traditional stores.

For instance, online retailers have much more data on consumer demand, competitor prices and supply factors that enable them to adjust prices much more frequently.

“The use of algorithmic pricing, which can result in rapidly changing prices, may pose challenges in terms of the measurement of consumer price inflation,” the paper noted.

An inability to measure high consumer price volatility “introduces the potential for significant month-to-month volatility in the headline CPI. This may distort the measure of pure price change reported in the monthly CPI,” the paper stated.

“It is not inherently problematic for online prices to exhibit a greater degree of volatility than their in-store counterparts since the prices collected do indeed represent a new market reality faced by consumers,” StatsCan said.

“Rather, challenges emerge in interpreting inflation dynamics based on a CPI that was designed to capture a monthly snapshot of prices, rather than prices that change as frequently as those in the online world,” it said.

The paper said that, at this point, the impact of these changing economic dynamics is having a “minimal impact” on monthly inflation reporting.

Yet, as the significance of the digital economy continues to grow, StatsCan said that its methods of collecting pricing data must continue to evolve to ensure statistics continue to accurately reflect economic conditions.

For instance, StatsCan reported that it is updating data collection methods for certain consumer categories, and expanding the baskets of goods and services that it collects prices on to include emerging sectors, such as spending on ride-share services and online streaming services.