Alterative Measures of Inflation

Inflation is usually measured using the Consumer Price Index (CPI) which is published by the National Statistical Service of Greece. Due to the fact, however, that the CPI is strongly influenced by various exogenous factors or by factors that are centrally administered, it is not always possible to get a picture of the true trend of inflation from the CPI itself. In this article, a number of indices are studied. These indices are derived indirectly from the official CPI and are considered as alternative measures of trend inflation. The indices considered are core inflation, i.e., CPI inflation excluding fresh fruits, vegetables and fuels, the CPI excluding outliers, the Weighted Median, and the Trimmed Mean. The analysis and comparison of these indices suggests that the best index for measuring the true trend of inflation is core inflation.