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Measuring Core Inflation in India

Author

Listed:
  • Das, Abhiman

    (Reserve Bank of India, Mumbai, India)

  • John, Joice

    (Reserve Bank of India, Mumbai, India)

  • Singh, Sanjay

    (Reserve Bank of India, Mumbai, India)

Abstract

The inflation, which is, calculated as year-on-year percent change in general price level, is a combined effect of several types of price changes. The monetary authority tries to track that part of inflation, which can be effectively monitored and controlled using various monetary instruments. This persistent component of inflation is termed as ‘Core Inflation’, which comprises long-run properties as well as predictive power of future inflation. In this paper, 12 different measures of core inflation making use of 8 different methodologies viz. Exclusion basis, Mean-SD, Median, Trimmed Mean, Historical Standard Deviation, Hodrick-Prescott Filter, Wavelet Filter and Structural Vector AutoRegression (SVAR) are presented. Moreover, this paper has outlined 9 approaches for judging the preferred measure(s) based on different properties of core inflation.

Suggested Citation

  • Das, Abhiman & John, Joice & Singh, Sanjay, 2009. "Measuring Core Inflation in India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 44(2), pages 247-273.
    • Handle: RePEc:dse:indecr:0007
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    Cited by:

    1. Priyanka Sahu, 2021. "A Study on the Dynamic Behaviour of Headline Versus Core Inflation: Evidence from India," Global Business Review, International Management Institute, vol. 22(6), pages 1574-1593, December.
    2. Naresh Kumar Sharma & Motilal Bicchal & Caroline Elliott, 2015. "Measuring core inflation in India: An asymmetric trimmed mean approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 3(1), pages 1014252-101, December.
    3. Joice John & Abhiman Das & Sanjay Singh, 2016. "An Application of Quah and Vahey’s SVAR Methodology for Estimating Core Inflation in India: A Note," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 14(1), pages 151-158, June.

    More about this item

    Keywords

    CoreInflation;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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