What online prices reveal about inflation in South Africa

E‐commerce data enable economists to study a range of economic phenomena, ranging from price dynamics, market structure and product entry and innovation, consumer demand and behaviour, and pass‐through of input costs to final retail prices. In this paper we compare developments in e‐commerce prices to official estimates of consumer good inflation in South Africa. We highlight measurement challenges and differences between online list prices and officially surveyed statistics from discounting, product changes and product availability over time. We also evaluate online discounting behaviour for specific products and product categories, especially during Black Friday sales, and quantify online price persistence in South Africa. We show that e‐commerce prices experience changes at a broadly similar frequency as our estimates imply for official measures of consumer prices. Our analysis suggests real‐time alternative data are important, not just for forecasting, but also for understanding the nature of price dynamics in South Africa.