A New Measure of Core Inflation in Pakistan

Riaz Riazuddin (riaz.riazuddin@sbp.org.pk), Muhammad Amin Khan Lodhi (amin.lodhi@sbp.org.pk), Muhammad Ashfaq (muhammad.ashfaqch@sbp.org.pk) and Behzad Ali Ahmad (behzad.ali@sbp.org.pk)
Additional contact information
Riaz Riazuddin: State Bank of Pakistan
Muhammad Amin Khan Lodhi: State Bank of Pakistan
Muhammad Ashfaq: State Bank of Pakistan
Behzad Ali Ahmad: State Bank of Pakistan

No 66, SBP Working Paper Series from State Bank of Pakistan, Research Department

Abstract: We propose a new method of permanently excluding relatively volatile commodities from CPI basket in Pakistan. This is achieved by making use of trimming approach on past data on monthly CPI changes to isolate a Relatively Stable Component of CPI (RSC-CPI) as a new measure of core inflation. This method ensures inclusion of both food and non-food commodities that show persistent price behavior in Pakistan. Three alternative core inflation series based on this new approach and four other core measures based on existing methodology have been evaluated. RSC-CPI based measures of core inflation are found to be the best in terms of desirable properties proposed by Marques et al (2003) for a core inflation measure and various relative performance indicators.

Keywords: Core inflation measures; trimmed means; exclusion methods. (search for similar items in EconPapers)
JEL-codes: C4 E31 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2013-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sbp.org.pk/repec/sbp/wpaper/wp66.pdf First version, 2013 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.sbp.org.pk/repec/sbp/wpaper/wp66.pdf [301 Moved Permanently]--> https://www.sbp.org.pk/repec/sbp/wpaper/wp66.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sbp:wpaper:66

Access Statistics for this paper

More papers in SBP Working Paper Series from State Bank of Pakistan, Research Department Contact information at EDIRC.
Bibliographic data for series maintained by Faisal Saleem (faisal.saleem@sbp.org.pk).