Here’s an ingenious business model: Pay people in developing countries to track prices of consumer goods in their hometowns and transmit the data using mobile phones.
With those data, the San Francisco startup Premise Data can sniff out inflation way before the statistical agencies in those nations have a clue. Local correspondents can be instructed to take pictures to capture other relevant information, including the length of lines outside a particular store or whether a certain AIDS clinic is open when it’s supposed to be. (Disclosure: Bloomberg, the parent company of this magazine, licenses some of Premise’s data for the use of its terminal customers.)
Seeing is believing. At the request of Bloomberg Businessweek, Premise put together these two charts, which show the prices of meat, sweets, and processed grains in two Nigerian cities, Kano and Lagos. The dates shown are around Eid al-Fitr, the Islamic feast day that marks the end of the month of Ramadan. Kano, in the north, is largely Muslim and observes Ramadan. People fast from dawn to sunset and eat heartily at night, consuming lots of meat and sweets. Lagos is largely Christian, so it doesn’t observe Ramadan, but it does observe Eid al-Fitr, a national holiday. The people of Lagos eat lots of meat and sweets on Eid al-Fitr but not before or after.
The first chart, for Kano, shows that prices of meat and sweets show no trend before Eid al-Fitr (because they’re consistently high), then drop abruptly after the holiday. The price of processed grains, which aren’t linked to the holiday, show no such pattern.
The second chart, for Lagos, shows a jump in the price of meat and sweets at the time of Eid al-Fitr. Unlike in Kano, before Eid al-Fitr there was no strong demand for meat and sweets, so prices weren’t elevated. Prices begin to drift downward after, as in Kano.
David Soloff, Premise’s chief executive, had a varied career before co-founding the company. According to the Premise website, he studied ancient languages, built guitar amps, worked as a rare book bibliographer, and analyzed stocks. In an interview, Soloff said the company initially targeted the BRIC countries—Brazil, Russia, India, and China—but has since seen enormous opportunity as well in Africa. It’s collaborating on data-gathering with Standard Chartered (STAN:LN), a British bank with a big presence in Africa.