Performance of Core Inflation Indicators: A Re-examination Including Post-COVID-19 Data

Shigenori Shiratsuka
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Shigenori Shiratsuka: Faculty of Economics, Keio University

No DP2026-006, Keio-IES Discussion Paper Series from Institute for Economics Studies, Keio University

Abstract: In this paper, I extend the dataset to include the post-COVID-19 period of consumer price increases and reassess the effectiveness of core inflation indicators for consumer prices. Specifically, following the analytical framework for evaluating core inflation indicators, I apply statistical methods to measure their accuracy from two perspectives: (1) their capacity to represent current underlying trends, and (2) their predictive power regarding future underlying trends. I especially examine how the effectiveness of different core inflation indicators shifts over the analysis period. It is evident that the reliability of core inflation indicators depends on the economic context. Therefore, while continuing to use the all-items index excluding fresh food as the primary measure, it is essential to compare and analyze a broader range of core inflation indicators, taking into account each indicator's characteristics.

Keywords: Consumer price index; Underlying inflation; Distribution of price changes by item (search for similar items in EconPapers)
JEL-codes: C43 E31 E52 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2026-03-23
New Economics Papers: this item is included in nep-mon
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