Powered by OpenAIRE graph
Found an issue? Give us feedback
addClaim

Core Inflation in the UK

Authors: Joanne Cutler;

Core Inflation in the UK

Abstract

This paper presents a new measure of core inflation for the UK based on the idea that it is the persistence of individual inflation rates which matters in measuring the level of underlying inflation. The measure is based on the same components as RPIX, but it weights individual price changes by their past persistence, instead of their importance in households' budgets, to derive a persistence-weighted core inflation measure, or RPIXP for short. This operationalises Blinder's concept of core inflation as the durable or persistence part of aggregate inflation. The paper evaluates this new measure against existing measures in terms of its ability to predict future RPIX inflation. It finds that the new RPIXP is a good predictor of RPIX 6 months and 12 months ahead, and outperforms most other core inflation measures, as well as current RPIX itself, in its predictive ability. Surprisingly, RPIX excluding food and energy - which is a popular way of measuring underlying inflation - is a poor predictor of RPIX. One reason is that this measure excludes non-seasonal food prices which are highly persistent in the UK.

Keywords

ddc:330

  • BIP!
    Impact byBIP!
    selected citations
    These citations are derived from selected sources.
    This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    0
    popularity
    This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
    Average
    influence
    This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    Average
    impulse
    This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
    Average
Powered by OpenAIRE graph
Found an issue? Give us feedback
selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
Upload OA version
Are you the author of this publication? Upload your Open Access version to Zenodo!
It’s fast and easy, just two clicks!