A NOTE ON THE TRIMMED MEAN MEASURE OF CORE INFLATION IN SOUTH AFRICA |
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Authors: | Zelda Blignaut Greg Farrell Victor Munyama Logan Rangasamy |
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Institution: | 1. Research Department, South African Reserve Bank, South African.;2. Research Department, South African Reserve Bank.;3. School of Economic and Business Sciences, University of the Witwatersrand.;4. Graduate School of Business, University of the North‐West, Mafikeng Campus. |
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Abstract: | This paper constructs and analyses the properties of a trimmed mean inflation rate for South Africa. Based on an analysis of the distributions of the consumer price index component price changes, a measure is constructed that provides an estimator of core inflation, which may be particularly useful to policymakers in an inflation‐targeting environment. The trimmed mean estimator focuses on the price movements of individual components that have a strong bearing on the current and future trend of the headline inflation rate, allowing monetary policy to be directed at the persistent or underlying sources of inflationary pressures. |
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Keywords: | C43 E31 E52 Core inflation underlying inflation trimmed mean |
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