Published 28 Jul, 2022
The new index, which places UK CPIH inflation at 13.68% over the 12 months to 27th July 2022, is over 5% higher than the official figures reported by the UK’s Office for National Statistics.
Since 2021, many parts of the world have been reporting unusually high inflation. This follows the COVID-19 lockdowns, supply chain constraints, and loose monetary policies that have kept economies afloat since the financial crisis of 2008/09 and during the pandemic.
Among G20 countries, the UK has announced some of the highest levels of inflation, perhaps due to the additional impact of Brexit and the energy crisis across Europe. In July 2022, the UK’s CPI inflation was reported at 9.4%, with CPIH - which includes housing costs - standing at 8.2% in the 12 months to June 2022. This is the highest inflation among G7 countries and marks a 40 year record high.
Some food prices increased up to ~26%, leading the public to believe that the official CPI numbers might be underestimating inflation on the ground.
Stefan Rust, founder, and CEO of Truflation, says: “Current inflation measurements around the world are using methodologies that are over a century old. How can we make informed and timely decisions using metrics that pre-date WWI; before the internet, mobile phones, social media, or data analytics?
“We are now waiting each month for outdated data releases while real-time information is all around, ready to be aggregated, processed, and used by businesses, investors, consumers, and even the policymakers should they so choose.”
Truflation, the winner of the 1729 decentralized inflation dashboard award, released its US inflation index in December and has just added UK inflation data to its public visualization app. The data is also available to blockchain and smart contract developers through the leading decentralized oracle network, Chainlink.
Unlike government-reported CPIs, the Truflation indices update daily, providing real-time inflation information and trends. Whilst official CPIs use customer and merchant surveys to gauge price increases, the Truflation UK metrics are based on robust sales information from 10 merchants and data aggregators, combining ~8 million prices to calculate actual consumer inflation.
Truflation also uses highly granular customer expenditure data to establish data weights for the calculations (‘% of Household Expenditure’ in the table below). Examining the types of expenses in an average home allowed Truflation to establish 12 main categories of goods and services to include in the inflation basket.
Unlike the official CPI, which calculates a predetermined basket of goods and manually collects ~180 000 price quotations per month, Truflation’s index automatically fetches millions of data points every month, including all the purchased items in each category.
Truflation’s US inflation index and the newly released UK inflation index are available through the Chainlink decentralized oracle network. Thanks to Chainlink’s blockchain-agnostic design, each metric can currently be incorporated into smart contract applications across four different blockchains: Ethereum, Avalanche, Fantom, and BNB Chain.
The oracles provide information about the YoY rate, the base index for each day, and the year-ago index. The inflation indices for 12 categories are also public and available to developers through Chainlink.
Truflation is an economic data aggregator serving independent, unbiased, real-time data on-chain and off-chain. Truflation’s goal is to help individuals, investors, companies, and institutions make more informed decisions by having access to independent and unbiased economic information.
Chainlink is the industry standard for building, accessing, and selling oracle services needed to power hybrid smart contracts on any blockchain. Chainlink oracle networks provide smart contracts with a way to reliably connect to any external API and leverage secure off-chain computations for enabling feature-rich applications. Chainlink currently secures tens of billions of dollars across DeFi, insurance, gaming, and other major industries, and offers global enterprises and leading data providers a universal gateway to all blockchains.
Learn more about Chainlink by visiting chain.link or reading the developer documentation at docs.chain.link. To discuss an integration, reach out to an expert.