Laurence Ball, Anusha Chari, Prachi Mishra, 14 April 2017

The inflation rate in India rose from 3.7% to 12.1% between 2001 and 2010, raising concerns that it will rise again. This column separately analyses India's core and headline inflation rates and argues that the average level of core inflation has been consistently less than that of headline inflation. Short-term volatility in prices, especially for food, has driven India’s headline inflation. Estimating a Phillips curve suggests a core inflation–output trade-off in India similar to that of advanced economies during the 1970s and 1980s.

Pablo Pincheira, Jorge Selaive, Jose Luis Nolazco, 15 February 2016

One thing economists can agree on is that inflation is hard to forecast. This column argues that in this context, the idea that ‘core inflation’ may be a useful predictor is very appealing, especially for central banks that need to know where inflation is heading. Evaluating the ability of core to forecast headline inflation for OECD and some non-OECD countries, it seems that sizable predictability emerges for a very small subset of countries, but it is either subtle or undetectable for most other economies.

Michele Lenza, Lucrezia Reichlin, 24 June 2011

Should central banks use the headline or the core measure measure of inflation to track medium-term inflationary pressures? Lorenzo Bini Smaghi, board member of the ECB, recently argued in favour of using headline inflation. This provoked strong opposition from Paul Krugman, amongst others. This column assesses the two sides of the debate.


CEPR Policy Research