10 Dec 2025
Recently, a paper entitled “Product Churn, Tastes and Price Indices”, co-authored by Dr Hao Lan from Department of Economics, the International Business School Suzhou (IBSS) at Xi’an Jiaotong-Liverpool University (XJTLU) along with his collaborators, has been accepted and published in the American Journal of Agricultural Economics, a field-top journal ranked ABS 3 and ABDC-A*. Focusing on how changes in product availability and consumer preferences shape inflation measurement, the study offers new empirical evidence on the bias of conventional price indices and the importance of accounting for household-level consumption dynamics in understanding cost-of-living inequality.
Price indices commonly used to measure inflation do not account for the entry and exit of products nor for systemic changes in consumer preferences over time. Recent developments in the theory of price indices show that these issues have significant impacts on the growth of prices that consumers experience. However, to execute these developments requires access to household level data. Analysing the ready meal purchases of 30,000 UK households during 2013-2022, we evaluate the extent of the bias between standard price indices and those that accommodate product churn as well as changes in consumer tastes. Household data also permit the effects to be calculated across income groups. Our results show that price indices commonly used to measure inflation significantly overstate the extent of price increases due to: (i) ‘representative’ prices used to measure the Consumer Prices Index do not adequately capture the prices of goods in household baskets, and (ii) the effect of the net entry of products and taste changes, the latter being particularly strong. Furthermore, differences in the shopping baskets across income groups suggests that inflation varies across the income distribution. We find that when product churn and taste changes are accounted for, ready meals prices rose over the period by around 3 per cent in low-income households compared with a rise of 12 and 14 per cent in middle- and higher-income households respectively. These issues are important not only for measuring cost-of-living and how it varies across income groups but also in addressing policy issues more generally.
Dr Hao Lan is an Associate Professor of Economics at the International Business School Suzhou (IBSS), Xi’an Jiaotong-Liverpool University (XJTLU). He obtained his PhD in Economics from the University of Nottingham and his MSc in Finance and Econometrics from the University of York, United Kingdom. His primary research focuses on time-series modelling of price dynamics in food retail markets using high-frequency supermarket scanner data. His work makes significant contributions to the academic literature on food market competition and supermarket pricing strategies at the micro level.
Dr Lan is also engaged in projects examining renewable energy transitions, as well as commodity and housing price dynamics. His research has been published in several world-leading journals, including the American Journal of Agricultural Economics (×2), Applied Economics, Energy Economics, Environmental and Resource Economics, International Review of Economics and Finance, Oxford Economic Papers, Journal of Agricultural Economics (×3), and Journal of Cleaner Production.
American Journal of Agricultural Economics, first named Journal of Farm Economics when founded in 1919 and renamed in 1968, is a top international academic journal in the field of agricultural economics published five times a year. Sponsored by the Agricultural & Applied Economics Association, this journal focuses on agricultural economics, natural resource and environmental economics, as well as rural and community development, and has strict academic standards for published papers. As a journal in JCR Q1 partition and CAS Category 2, it provides a high - level academic exchange platform for global researchers in agricultural economics and its related fields.
10 Dec 2025