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