Evaluating limited influence estimators of core inflation in New Zealand

Ryan Greenaway-McGrevy and James Allan Jones

New Zealand Economic Papers, 2026, vol. 60, issue 2, 232-241

Abstract: Core inflation is commonly understood as the component of headline inflation that is expected to persist over the medium term. This paper evaluates the recent performance of limited influence estimators of CPI inflation in New Zealand over the 2000 to 2024 period. We show that an asymmetric trimmed mean that removes 20% of the upper tail of the distribution, and 17% from the lower tail, minimizes squared errors when a conventional centered thirteen-quarter smoothed measure of headline inflation is used as an ex-post proxy for core inflation. These weights are close to the 20% trimmed mean published by Statistics NZ, suggesting that this measure currently offers the most reliable official measure of core inflation in the New Zealand context.

Date: 2026
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Working Paper: Evaluating Limited Influence Estimators of Core Inflation in New Zealand (2022)
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DOI: 10.1080/00779954.2025.2555351

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