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Measuring Core Inflation in Bangladesh: The Choice of Alternative Methods

Author

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  • Shahiduzzaman, Md

    (Research Economist, Policy Analysis Unit, Bangladesh Bank)

Abstract

In view of formulating credible monetary policy to attain the price stability objective, the difficult part for the cent ral banks is to distinguish, within ongoing inflation evolutions, between short term volatility and the underlying pressure of inflation. While it has now become a standard practice for most central banks around the world to monitor core inflation, no progress has so far been made in the Bangladesh context. This paper takes a pioneering look in measuring core inflation in Banglad esh focusing on th e popular exclusion and trimmed mean approaches. The pe rformance criteria adopted in this analysis show that the measure of core inflation developed in the paper has strong money-induced characteristics and therefore, can credibly be used as a short or medium term guide of monetary policy in Bangladesh.

Suggested Citation

  • Shahiduzzaman, Md, 2009. "Measuring Core Inflation in Bangladesh: The Choice of Alternative Methods," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 32(1), pages 23-44, March.
    • Handle: RePEc:ris:badest:0476
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    References listed on IDEAS

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    Cited by:

    1. Hossain, Monzur & Rafiq, Farhana, 2012. "Global Commodity Price Volatility and Domestic Inflation: Impact on the Performance of the Financial Sector in Bangladesh," MPRA Paper 52167, University Library of Munich, Germany.
    2. Murhula, Pacifique, 2020. "Tendance de l'inflation sous-jacente en RDC: une modélisation à partir de l'approche VAR structurelle [Trend of Core inflation in DRCongo: a model based on the Structural VAR approach]," MPRA Paper 105005, University Library of Munich, Germany, revised 08 Jan 2021.

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    More about this item

    Keywords

    Measuring Core Inflation; Bangladesh; Alternative Methods;
    All these keywords.

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General

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