Rubrik

1
SWEDISH CORE INFLATIONMEASURES
Peter Nilsson and Martin Ribe (presenter)Statist
ics Sweden Presentation at Joint UNECE/ILO
Conferenceon Consumer Price IndicesGeneva, May
2006
2
Swedish core inflation (underlying inflation)

• 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, 2006-05-03
3
Two core inflation measures

• 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, 2006-05-03
4
Principles of the measures

• Rates of price change like for CPI Ä 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, 2006-05-03
5
CPI approximates a COLI

• Cost-Of-Living Index (coli) Ä 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 2005Retrospective
  ly updated index basket
• Solution in Swedish CPI from 2005Superlative
  index (Walsh index)

M. Ribe, SCB, 2006-05-03
6
Chaining together of Previous and New CPI chains
Link ofNew type
Link of Previous type
Speciallink
Final link
M. Ribe, SCB, 2006-05-03
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Walsh link over full year
Expenditures
M. Ribe, SCB, 2006-05-03
8
Final Laspeyres link
During 2006 weighing with expenditures of 2004
M. Ribe, SCB, 2005-06-15
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Sub-indices by product group

• Trans-formsDecemberbase to year base

M. Ribe, SCB, 2005-06-15
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Index of a tax j
Tax rate astax per unit
VATrate

• Used for Net Price Index (NPI) andUND measures

M. Ribe, SCB, 2006-05-03
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Inflation rate
M. Ribe, SCB, 2006-05-03
12
Year-to-year link of UND1X
Taxes Subsidies
Change in index of tax/subsidy k
M. Ribe, SCB, 2006-05-03
13
Walsh weight of a tax k
Tax revenues
M. Ribe, SCB, 2006-05-03
14
Year-to-month link of UND1X
M. Ribe, SCB, 2006-05-03