Methodology Matters | Truflation

Methodology Matters

Truflation offers a more reliable view of inflation, contrasting with government metrics that have outdated methodologies and limited transparency. With over 10 million data points, it updates daily and has a dynamic methodology that responds to global market conditions.

The Old Way

The Old Metrics Can’t Keep Up

Traditional inflation metrics are outdated. The world has changed dramatically due to events like Covid-19, increased money supply, and shaky global supply chains. Yet, we continue to rely on old metrics established over a century ago.

Think about this: the last major update to the US inflation framework was in 1999. At that time, electric cars were futuristic dreams, iPhones didn't exist, and e-commerce was in its infancy. Our world today is radically different.

With Truflation

Modernizing Inflation Metrics

Truflation's response? We utilize modern consumer and spending data sets along with cutting-edge technology to deliver the world’s only verifiable daily inflation indexes. Here’s what makes Truflation’s indexes stand out:

Speed and Frequency

Our indexes are available 30 times faster than conventional tools, with daily reporting keeping you ahead of the curve.

Robust and Balanced Data

By licensing data from over 30 providers and aggregators, we ensure a representative and balanced measurement. Multiple sources per category, each with distinct methodologies, amplify accuracy.

Census-Level Depth

With access to more than 10 million data points, as opposed to the traditional 80,000, our indexes offer unmatched depth.

Truflation employs a meticulous seven-step process to create our indexes, ensuring that our products reflect genuine shifts in consumer prices, free from external distortions.

To read in more detail, download our in-depth methodology PDF.

Relative Importance

Decoding Household Expenditures

To construct the Truflation indexes, understanding household spending patterns is crucial. We distill expenditures into twelve categories, representing a diverse array of products and services.
Each category has a consistent definition across all markets, though the relative importance of these categories varies from country to country. We determine this relative importance by triangulating data from multiple sources such as Census surveys, Bureau of Labor and Statistics, NielsenIQ, and financial institutions.
The weights assigned to categories reflect evolving consumer behavior and are updated annually, ensuring that Truflation’s index remains a precise and relevant tool for analyzing inflation.

15.3%
Food & non-alcoholic beverages
23.3%
Housing
19.8%
Transportation
5.9%
Utilities
8.6%
Health
7.2%
Household durables
1.9%
Alcohol & tobacco
3.8%
Clothing & footwear
3.8%
Communication
2.3%
Education
5.6%
Recreation & culture
3.2%
Other

Built on the Most Trustworthy Data

We currently collaborate with over 30 data partners, including commercial sources, aggregators, and research institutes such as NielsenIQ, Kantar, and Zillow. This extensive network enables access to more than 10 million data points, in contrast to the 80,000 used by legacy indexes.

We dynamically update our list of data partners, ensuring a rich and evolving data pool. With each partner updating data at various intervals – daily, weekly, or monthly – Truflation’s index refreshes accordingly, boasting an unmatched speed in data availability.

Truflation employs a multi-stage audit and validation process for all potential data sources. They must undergo a stringent audit involving methodology review, quality control procedures, and legal assessments.

Stringent Quality Control Mechanisms

This rigorous process underscores Truflation's commitment to delivering trustworthy and high-caliber indexes

Rigorous Initial Screening

Once the data enters Truflation's sandbox, it undergoes three core validation checks: data presence for historical comparisons, historical data consistency, and current data integrity. If the data passes these checks, it is subject to a final automated daily check ensuring variations within acceptable limits.

Secured Processing Window

Truflation further ensures accuracy by locking data for 24 hours before processing. The algorithm runs at the end of this period, generating the daily Truflation index, which is reported with a one-day delay.

Reliable Error Resolution

Should any red flags be raised during validation, the data remains in the sandbox. It is scrutinized and verified with the data provider. If required, interim data is used until the new data is cleared. Only then is the data moved to the Truflation database, locked for 24 hours to ensure stability, and readied for the calculation phase.

Learn More About Our Methods

We empower individuals, investors, and institutions with unbiased information, allowing them to make wiser choices. Truflation is not just an index – it's a catalyst for innovation and growth across industries and geographies. To learn more about our methodology. we encourage you to download our in-depth paper describing how we calculate the Truflation indexes.

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