CPI-FW: a frequency weighted indicator of underlying inflation
- Agnes Marie Simensen and Fredrik Wulfsberg
- Economic Commentaries
The monthly change in the CPI varies considerably, and the change from one month to the next often provides little indication about the future direction of inflation. In order to be able to form a picture of how much of these changes is due to special short-term factors and how much is due to real shifts in the rate of inflation, indicators of underlying inflation are used. Norges Bank has monitored various indicators of underlying inflation in recent years: CPI-ATE, CPIXE, a 20 per cent trimmed mean and a weighted median. In this commentary, we present a new indicator of underlying inflation, CPI-FW, which is based on the consumer price index but gives less weight to prices that change frequently than to those that change infrequently.
This series consists of short, signed articles on current economic issues and are only published on Norges Bank’s website.