What do measures of core inflation really tell us?

Quarterly Bulletin 2002 Q4
Published on 16 December 2002

By Alan Mankikar and Jo Paisley of the Bank's Conjunctural Assessment and Projections Division. 

Despite the widespread use of the term 'core inflation', there is neither a widely accepted theoretical definition, nor an agreed method of measuring it. The wide range of conceptual bases is potentially confusing, particularly when the measures display different trends. This article offers an overview of some of the issues. It examines how core inflation has been defined, sets out to what extent the concept might be useful for policy-makers and assesses the wide range of available measures in the United Kingdom.

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