By Joanne Cutler
Measures of core inflation attempt to strip out the effect of temporary disturbances from headline inflation, to uncover the underlying rate of inflation. This article looks at a selection of core inflation measures that have been estimated for the United Kingdom. It also introduces a new measure based on the idea that persistence of disaggregated inflation rates matters when measuring core inflation. These different measures of core inflation are evaluated against a number of desirable criteria, as suggested by the literature, and in particular their correlation with future RPIX inflation.
Core inflation in the United Kingdom