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A possible new indicator to measure core inflation in the euro area
[Un nouvel indicateur possible pour mesurer l’inflation sous-jacente en zone euro]

Author

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  • Antoine Lalliard
  • Pierre-Antoine Robert

Abstract

Inflation for the euro area as a whole is measured using the Harmonised Index of Consumer Prices (HICP). This index faithfully reflects the changes in the average price of the entire household consumption basket, but is notorious for being disrupted by high variability in the prices of certain goods. Consequently, core inflation, which is more stable, also needs to be monitored. This is usually measured in the euro area as the change in prices excluding energy and food. However, this indicator too is sometimes subject to erratic movements, which can complicate economic analyses. Therefore, other indicators, such as trimmed mean HICP, are also used. Fine core HICP, presented in this article, aims to further this analysis. Monitoring several indicators of core inflation allows central banks to capture trends in inflation in the most comprehensive manner possible. Au niveau de la zone euro dans son ensemble, l’inflation est mesurée à partir de l’indice des prix à la consommation harmonisé (IPCH). Cet indice reflète fidèlement l’évolution de la moyenne des prix de l’ensemble du panier de consommation des ménages, mais il est notoirement perturbé par la forte variabilité des prix de certains biens, d’où la nécessité de suivre également l’inflation sous-jacente, plus stable. Celle-ci est habituellement mesurée en zone euro par l’évolution des prix hors produits énergétiques et alimentaires. Cependant cet indicateur subit également parfois des mouvements erratiques, pouvant en compliquer l’analyse économique. On lui adjoint donc d’autres indicateurs, tel l’indice IPCH à moyenne tronquée (aussi appelé IPCH trimmed means). L’IPCH fine core (ou IPCH sous-jacent à exclusion fine), présenté dans cet article, vise à approfondir cette analyse. Suivre plusieurs indicateurs de l’inflation sous-jacente permet aux banques centrales de cerner de la façon la plus complète possible l’évolution tendancielle de l’inflation.

Suggested Citation

  • Antoine Lalliard & Pierre-Antoine Robert, 2022. "A possible new indicator to measure core inflation in the euro area [Un nouvel indicateur possible pour mesurer l’inflation sous-jacente en zone euro]," Bulletin de la Banque de France, Banque de France, issue 240.
    • Handle: RePEc:bfr:bullbf:2022:240:01
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    References listed on IDEAS

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    3. Gautier, E. & Lalliard, A., 2013. "Quels sont les effets sur l’inflation des changements de TVA en France ?," Bulletin de la Banque de France, Banque de France, issue 194, pages 81-97.
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    5. Michael F. Bryan & Stephen G. Cecchetti, 1994. "Measuring Core Inflation," NBER Chapters, in: Monetary Policy, pages 195-219, National Bureau of Economic Research, Inc.
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    7. Jim Dolmas, 2005. "Trimmed mean PCE inflation," Working Papers 0506, Federal Reserve Bank of Dallas.
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    Cited by:

    1. Le Bihan, Hervé & Leiva-Leon, Danilo & Pacce, Matías, 2023. "Underlying inflation and asymmetric risks," Working Paper Series 2848, European Central Bank.

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