Measures of Underlying Inflation in Sri Lanka

Magnus Saxegaard and Souvik Gupta

No 09/167, IMF Working Papers from International Monetary Fund

Abstract: During the first half of 2008, Sri Lanka witnessed significantly higher inflation than most other emerging Asian countries. Inflation has since declined amid declining world commodity prices and tight monetary policy. Given the sensitivity to global commodity prices, a core inflation measure could be useful for monetary policy. The purpose of this paper is to compare the performance of Sri Lanka's existing official measure of core inflation against alternative measures. Our findings suggest that the existing measure does contain information about the future path of headline information, but may be inadequate as a communication tool for the Central Bank.

Keywords: Central bank policy; Consumer price indexes; Economic models; Inflation; Monetary policy; Performance indicators; Price structures; Sri Lanka (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-sea
Date: 2009-08-10
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