NSCB Resolution No. 6
Series of 2003

Annex BR-6-2003-1

OFFICIAL DEFINITION OF CORE INFLATION

1. Conceptual Definition

Headline inflation measures changes in the cost of living based on movements in the prices of a specified basket of major commodities. It refers to the annual rate of change or the year-on-year change in the Consumer Price Index (CPI).

Core inflation is a measure of inflation that aims to capture the permanent component of the inflationary process that can be influenced by monetary policy.

2. Operational Definition

For statistical purposes, core inflation shall refer to the year-on-year rate of change of the monthly headline CPI after excluding food and energy items. Headline inflation is the rate of change in the overall consumer price index (CPI) currently published by the National Statistics Office (NSO).

CPI components to be excluded from core inflation:

The items to be excluded from the definition of core inflation, based on the list of CPI components at the Sub-Group (4-digit) level, are as follows (corresponding CPI weights in parentheses):

(a) Rice (11.82 percent)
(b) Corn (1.23 percent)
(c) Fruits & Vegetables (5.35 percent)
(d) LPG (0.68 percent)
(e) Kerosene (0.40 percent)
(f) Oil, Gasoline and Diesel (0.72 percent)

The excluded items account for 20.2 percent of the CPI.

The list of excluded items shall be reviewed by the NSCB Board and the Technical Committee on Price Statistics (TCPS) whenever the CPI data is rebased.