Online Prices and Inflation During the Nationwide COVID-19 Quarantine Period: Evidence from 107 Chinese Websites

Given the lack of activity in China’s offline economy during the COVID-19 quarantine period, online prices provide new insights for analyzing the impacts of the pandemic on the economy. Using online prices from 107 websites in China and the DiD method to remove the Spring Festival effect, we show that the pandemic leads to a 0.4% surge in the overall inflation rate, a 20% decrease in the price change probability, and a 1% decline in the size of absolute price changes. Moreover, the pandemic had heterogeneous impacts on different sectors, leading to significant structural changes in inflation. Specifically, the pandemic hindered the price correction behavior after Spring Festival, and whether products could be consumed while customers stayed at home was an important factor affecting price adjustment and inflation dynamics.