Measures of Underlying Inflation in Sri Lanka

22 Pages Posted: 19 Aug 2009

See all articles by Souvik Gupta

Souvik Gupta

International Monetary Fund (IMF)

Magnus Saxegaard

International Monetary Fund (IMF)

Date Written: August 2009

Abstract

During the first half of 2008, Sri Lanka witnessed significantly higher inflation than most other emerging Asian countries. Inflation has since declined amid declining world commodity prices and tight monetary policy. Given the sensitivity to global commodity prices, a core inflation measure could be useful for monetary policy. The purpose of this paper is to compare the performance of Sri Lanka's existing official measure of core inflation against alternative measures. Our findings suggest that the existing measure does contain information about the future path of headline information, but may be inadequate as a communication tool for the Central Bank.

Keywords: Central bank policy, Consumer price indexes, Economic models, Inflation, Monetary policy, Performance indicators, Price structures, Sri Lanka

Suggested Citation

Gupta, Souvik and Saxegaard, Magnus, Measures of Underlying Inflation in Sri Lanka (August 2009). IMF Working Paper No. 09/167, Available at SSRN: https://ssrn.com/abstract=1457590

Souvik Gupta

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Magnus Saxegaard (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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