A Measure of Core Inflation in the UK
AbstractWe develop a measure of core inflation in the UK over the period January1987 - December 1998, following the work of Bryan and Cecchetti (1996),Bryan, Cecchetti and Wiggins (1997) and Roger (1997). Disaggregation is into85 price categories. Given the high kurtosis of the price change distribution over this period, a trimmed mean is a more robust estimator of core inflation than other published measures such as the RPIX widely used in the UK, in particular by the Bank of England when targeting inflation. We discuss the relative advantages of our measure of core inflation, with emphasis on the determination of an optimal trimming point and on the analysis of the products whose price changes are excluded from our measure in each time period. The resulting measure appears well behaved, but differs noticeably from a number of published measures.
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Bibliographic InfoPaper provided by ISEG - School of Economics and Management, Department of Economics, University of Lisbon in its series Working Papers Department of Economics with number 2001/05.
Date of creation: 2001
Date of revision:
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Postal: Department of Economics, ISEG - School of Economics and Management, University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL
Web page: https://aquila1.iseg.ulisboa.pt/aquila/departamentos/EC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-07-30 (All new papers)
- NEP-EEC-2001-07-30 (European Economics)
- NEP-MON-2001-07-30 (Monetary Economics)
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- Alan Mankikar & Jo Paisley, 2004. "Core inflation: a critical guide," Bank of England working papers 242, Bank of England.
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