Modernizing the clothing and footwear component of the Swedish HICP

ended

The Swedish HICP have undergone significant changes during the last decade and now include a large amount of “alternative” data sources, i.e., transaction/scanner and web scraped data. One sub-index which have, however, remained fairly unchanged in the Swedish HICP is COICOP 03: Clothing and footwear. Price collection for COICOP 03 is mainly done manually, either in physical outlets or over the internet, and quality adjustment is based on a hedonic regression model which adjusts for differences in type of brand and (for clothing) physical characteristics. There are several reasons for why the sub-index of COICOP 03 has remained unchanged to a higher degree than many other components of the Swedish HICP when new, alternative, data sources have been incorporated into the index. Firstly, the market for clothing and footwear is highly dynamic. Most products show a very short life span, which makes measuring price change particularly challenging. Today, product specifications within the clothing and footwear component of the Swedish HICP are developed by experts at the price unit. Interviewers collecting the data, in physical outlets or online, manually select products that fit this specification. Since this method involves manual (subjective) elements, it is not easily “translated” to an application on alternative data. Similarly, the current approach to web scraping, used within other areas of the Swedish HICP today, involves target scraping coupled with a manual method for linking disappearing products with their replacements. Because of the dynamic nature of the clothing and footwear market, this method would probably be very resource demanding if applied within this area. Hence, in summary, the current approach to product specification will need to be reviewed before new types of data can be used efficiently in the indices for COICOP 03. Secondly, the market for clothing and footwear is highly fragmented between different chain stores, which complicates price