Revised method for calculating the CPIXE
To determine what underlying inflation is at any given time, Norges Bank looks at a number of indicators (see Inflation indicators). The CPI adjusted for tax changes and excluding temporary changes in energy prices (CPIXE) is one such indicator. In 2008, Norges Bank began to calculate this indicator to take into account the high trend rise in energy prices. In periods when movements in energy prices differ substantially from movements in other consumer prices, this indicator may contain information about underlying inflation not captured by other indicators. In recent years, energy prices have, on average, risen approximately as much as other consumer prices, so that this indicator provides fairly little additional information about underlying inflation beyond what is captured by other indicators. As this picture can change, the CPIXE will continue to be one of several indicators included in Norges Bank's assessment of underlying inflation.
Experience with the CPIXE since 2008 shows a fair amount of variability in the energy price trend as it has been estimated heretofore. To reduce the volatility in the estimated energy price trend, as from the publication of consumer price data for June 2013, Norges Bank will make the following changes to its method for calculating the CPIXE:
- The energy price trend will be estimated as an asymmetric moving average of the monthly rise in actual energy prices in the CPI over the two previous years, and projected energy prices for the coming year. Actual and projected, future energy prices are calculated in the same manner as previously (see Staff Memo 3/2009, pp. 2-7) (Norwegian only).
- The CPIXE is a weighted average of the monthly rise in the CPI-ATE and the monthly rise in the energy price trend.
In real time, the new method produces less monthly fluctuation in the rise in the energy price trend. The average rise in the CPIXE calculated using the new method is slightly higher, and thus closer to average CPI inflation, than the CPIXE calculated using the old method. In the past two months (April and May), the 12-month change in the CPIXE calculated using the new method was 0.1 percentage point lower than the CPIXE calculated using the old method. See table in Excel for the CPIXE calculated using both the old and new methods.
Henceforth, only real-time figures for the 12-month change in the CPIXE calculated using the new method will be published and not revised series. Revised historical series for the CPIXE calculated using the old method are available in the tables in Excel.
- More specifically, a 37-month asymmetric moving average of the monthly rise in the energy price index for month t: 24 months historical data + month t + 12 months projected, future energy prices. Previously, the CPIXE was calculated as a weighted average of the 12-month change in the CPI-ATE and the 12-month change in an energy price trend. The energy price trend was estimated using a Hodrick-Prescott (HP) filter on an energy price index, which in turn was composed of actual energy prices in the CPI and of projected, future energy prices. See Staff Memo 7/2008 and Staff Memo 3/2009 (Norwegian only) for a further description.