[ Abstract / Highlights ]
In this paper, we examine whether inflation was observed under the first wave of the COVID-19 spread. To address this issue, we construct high-frequency quality-adjusted price indices by employing daily scanner data of retail stores in Tokyo. We attempt to make explicit adjustments for not only the product characteristics but also the structural changes in temporary sales and the retail service quality of outlet channels. We emphasize that adjustments for the effects of temporary sales and retail service quality are particularly important in examining the retail price dynamics under the COVID-19 pandemic as the voluntary lockdown constrained household purchasing behavior because of the risk of COVID-19 infection. We conclude that mild and temporary inflation of slightly less than 1% was observed during the first wave of the COVID-19 spread. Based on the estimation results, we decompose the differences between the increases in the unit prices and those in the quality-adjusted price indices into outlet substitution effects and temporary sales effects.