ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles By K M Neelima

Persistence and Volatility-weighted Measures of Core Inflation for India

Unlike exclusion-based measures which remove food and fuel entirely from core inflation, the proposed core measures, using alternative weighting schemes, assign higher weight to the more persistent and less volatile groups in both food and non-food components to capture the more durable part of inflation. We show that our constructed indices satisfy the common properties of core inflation as (i) an unbiased estimate, (ii) a smoother and persistent component, and (iii) a good predictor of headline inflation, thus providing an alternative gauge of underlying inflation.