Summary

The Riksbank has evaluated different measures of core inflation in an Economic Commentary and in an article from 2018.^[1] Economic Commentaries are brief analyses of issues with relevance for the Riksbank. They can be written by individual members of the Executive Board or by employees at the Riksbank. Employees’ Commentaries are approved by their head of department, while Executive Board members are themselves responsible for the content of their Commentaries. A few years have now passed and over the period the Riksbank has started to use more measures. In particular, in recent years we have increasingly analysed measures of price changes over periods shorter than one year.^[2] In recent Monetary Policy Reports, for example, we have shown measures of 1-month and 3-month changes in the various measures of core inflation based on seasonally adjusted price indices. In this Economic Commentary, we evaluate the new measures, which are based on price changes over periods shorter than one year, and the old ones evaluated in 2018.

One conclusion is that measures of price changes over periods shorter than one year are usually not very good at forecasting future inflation measured as an annual percentage change in the CPIF. However, over the past five years, which includes the period of rapidly rising and then rapidly falling inflation, measures calculated over shorter periods have been better, relatively speaking.

Published: 21 February 2024