Weekly Updates
Weekly Updates
- The developed economy consumers’ shift from buying goods to having fun creates distortions in economic data. The growing importance of mega events can increase consumer price indices—without necessarily increasing consumers’ cost of living.
- The Olympic Games or a Taylor Swift concert create a sudden demand shock. Tickets for mega events will often sell for high prices—but that may not be recorded in consumer price data. The survey method used often overlooks specific events like this.
- The services that support the mega event are a different matter. Hotel prices will often rise for accommodation near a mega event venue. Transport costs (in particular air fares) may also increase. The measurement method for these prices is more likely to capture the unusual and transitory pattern of demand, and it is here that the increase in consumer price inflation takes place.
- Price increases generated by a concentrated increase in demand will not affect the cost of living for most consumers. The June increase in UK hotel prices may have been borne by a select group of aficionados of Taylor Swift’s music. The tourists flocking to Paris for the Olympics, and paying the price, are not representative of French consumers. The average consumer’s spending power is unaffected by the mega event.
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