What are Consumer Price Statistics Good for?

Authors: B. Ferenczi; S. Valkovszky; J. Vincze

Source: Acta Oeconomica, Volume 52, Number 2, 19 July 2002 , pp. 163-186(24)

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Abstract:

This paper studies five different aspects of inflation. Undoubtedly, there are manifold requirements made on the consumer price index. It is designed to measure changes in the cost of living and the cost of holding money, to serve as basis for calculating real interest rate and real exchange rates and to fulfil the coordinating role of a core inflation index. The authors of this paper believe that seeking to capture inflation in terms of a single “universal” indicator may lead to an oversimplification of the concept. In its current form, the Hungarian consumer price index does not “purely” suit any one of the theoretical concepts of inflation. The objective of this paper is to draw up a number of proposals related to the methodology of consumer price statistics, which appear to be one of the best data sources. In an attempt to make full use of this quality and illustrate the problems noted above, we shall propose a set of indicators, for analytical purposes, designed to be appropriate for the various “areas of application”.

Keywords: inflation measurement; real interest rates; core inflation; real exchange rates

Document Type: Research article

Publication date: 2002-07-19

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