Dhaka, Bangladesh (BBN) – Bangladesh is going to introduce the core inflation measure along with the existing headline ones to formulate credible monetary policy and forecasting inflation, officials said.
The central bank has already calculated core (non-food, non-fuel) CPI inflation using date of the Bangladesh Bureau of Statistics (BBS) on trial basis which will be used by the policy markets in the near future.
“We’ve calculated the core inflation on the basis of BBS data,” a senior official of the Bangladesh Bank (BB), the country’s central bank, told BBN, adding that such inflation measuring will help to implement the BB’s monetary policy efficiently.
Core inflation is a measure of inflation which excludes temporary noise components, notably food and fuel, from consumers’ price index (CPI) basket.
The key objective of computing core inflation is to separate out the components of headline inflation, officially known as general inflation, that are caused by non-monetary events as these price changes do not reflect the impact of underlying monetary policy decisions.
In South and Southeast Asia, many countries including Pakistan, Philippines, Sri Lanka and Thailand regularly publish and monitor the core inflation.
Currently, the central bank monitors the 12- month moving average of CPI inflation in defining the underlying trend that averages out the short-term or transitory components (seasonal impact) in the CPI.
BBN/SSR/AD-12Apr12-8:50 am (BST)