Henry Ohlsson: Underlying inflation - for better or for worse

Speech by Mr Henry Ohlsson, Deputy Governor of the Sveriges Riksbank, at a meeting of the Swedish Society of Financial Analysts, Stockholm, 13 May 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Thank you very much for the invitation to come and speak at the Swedish Society of Financial Analysts!

Concepts such as underlying inflation and core inflation are often used in discussions on inflation and monetary policy. But what do these concepts actually mean? And what do measures of underlying inflation actually measure? My aim today is to discuss why central banks are interested in underlying inflation and how it can be measured.

I will first explain why we need to measure underlying inflation (or core in-flation, which I regard as a synonym) and then briefly describe the history of the concept. There are two common methods of calculating underlying inflation, and on the basis of these I will discuss which properties are desir-able for measures of underlying inflation. I will also present different exam-ples of measures.