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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Measuring core inflation in South Africa
Authors:Du Plessis, Stan
du Rand, Gideon
Kotzé, KevinISNI
Year:2015
Periodical:South African Journal of Economics (ISSN 0038-2280)
Volume:83
Issue:4
Pages:527-548
Language:English
Geographic term:South Africa
Subjects:inflation
price indexes
economic models
External link:https://doi.org/10.1111/saje.12090
Abstract:Measures of core inflation convey critical information about an economy. They have a direct effect on the policymaking process, particularly in inflation-targeting countries, and are utilised in forecasting and modelling exercises. In South Africa, the price indices on which inflation is based have been subject to important structural breaks following changes to the underlying basket of goods and the methodology for constructing price indices. This paper seeks to identify a consistent measure of core inflation for South Africa using trimmed means estimates, measures that exclude changes in food and energy prices, dynamic factor models, and wavelet decompositions. After considering the forecasting ability of these measures, which provide an indication of expected second-round inflationary effects, traditional in-sample criteria were used for further comparative purposes. The results suggest that wavelet decompositions provide a useful measure of this critical variable. Bibliogr., notes, ref., sum. [Journal abstract]
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