SWEDISH CORE INFLATION MEASURES Peter Nilsson and Martin Ribe (presenter) Statistics Sweden Presentation at Joint UNECE/ILO Conference on Consumer Price.

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Presentation transcript:

SWEDISH CORE INFLATION MEASURES Peter Nilsson and Martin Ribe (presenter) Statistics Sweden Presentation at Joint UNECE/ILO Conference on Consumer Price Indices Geneva, May 2006

Alternative measures of inflation for use in monetary policy General idea: To capture price change except changes of temporary/transitional or exogenous kind ’UND’ measures of core inflation – defined by Sveriges Riksbank and produced monthly by Statistics Sweden M. Ribe, SCB, Swedish core inflation (underlying inflation)

UND1X – shows price change except changes in: ▪ Owner occupiers’ interest cost ▪ Indirect taxes & subsidies UNDINHX – shows price change except changes in: ▪ Owner occupiers’ interest cost ▪ Indirect taxes & subsidies ▪ Prices of mainly imported products M. Ribe, SCB, Two core inflation measures

Principles of the measures Rates of price change like for CPI  The index construction for the CPI is followed – new index construction used from 2005 Same taxes & subsidies are adjusted for as in the Net Price Index (NPI) Mainly retail stage changes adjusted for Changes in taxes and subsidies are assumed to have immediate and full impact on consumer prices M. Ribe, SCB,

CPI approximates a COLI Cost-Of-Living Index (coli)  To follow the cost of living at a constant standard of living Approximation to a coli by a fixed basket index that avoids Laspeyres bias Solution in Swedish CPI before 2005: Retrospectively updated index basket Solution in Swedish CPI from 2005: Superlative index (Walsh index) M. Ribe, SCB,

Link of Previous type Special link Link of New type Final link M. Ribe, SCB, Chaining together of Previous and New CPI chains

Walsh link over full year M. Ribe, SCB, Expenditures

Final Laspeyres link During 2006 weighing with expenditures of 2004 M. Ribe, SCB,

Sub-indices by product group  Trans- forms December base to year base M. Ribe, SCB,

Index of a tax j M. Ribe, SCB, Tax rate as tax per unit VAT rate Used for Net Price Index (NPI) and ’UND’ measures

Inflation rate M. Ribe, SCB,

Year-to-year link of UND1X M. Ribe, SCB, Taxes & Subsidies Change in index of tax/subsidy k

Walsh weight of a tax k M. Ribe, SCB, Tax revenues

Year-to-month link of UND1X M. Ribe, SCB,