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I. ABOUT THE DATA

A. Concepts/Definitions

Core inflation is defined as the rate of change of headline Consumer Price Index (CPI) after excluding selected food and energy items. It aims to capture the permanent component of the inflationary process that can be influenced by monetary policy. In principle, headline inflation, which refers to the rate of change in the overall CPI, aims to capture changes in peoples’ cost of living based on the movements of the average price of a specified basket of commodities and services consumed by a typical Filipino household. By contrast, core inflation excludes certain items in the overall CPI whose price movements are generally characterized by short-term volatile movements. Core inflation represents the long-term trend of inflation (as opposed to its short-term fluctuations) which can be directly affected by economic policy, specifically monetary policy. Core inflation serves as a useful complement to headline inflation by providing information about the long-term direction of consumer price movements and serving as an indicator of future inflation.

B. Unit of Measure

Core inflation is expressed in percent.

C. Reference Period

The current Consumer Price Index that serves as basis for computing core inflation uses 2000 as the base period, hence the reference period of core inflation is 2000.

D. Coverage/Scope and Limitations

• The items to be excluded from the definition of core inflation based on the list of CPI components and their corresponding CPI weights are as follows:

a.) Rice (9.4 percent)
b.) Corn (0.9 percent)
c.) Fruits and vegetables (5.3 percent)
d.) LPG (1.3 percent)
e.) Kerosene (0.3 percent)
f.) Oil, Gasoline and Diesel ( 1.3 percent)

Together, the above excluded items account for 18.5 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.

• Core inflation is computed at the national level only.

E. Source and Frequency of Data

• Source of data

Core inflation is a derived indicator that uses the data generated from the monthly CPI (unadjusted/original data).

• Frequency of conduct

Core inflation is computed/generated monthly.

F. Estimation/Compilation Methodology

• There are a number of methods used for estimating core inflation. These are exclusion method, trimmed mean method, weighted median method and estimating using econometric models. In the Philippines, the official core inflation measure is computed using the exclusion method. This approach was chosen for the following reasons: (1) it is easier to understand compared to other methodologies; (2) it is more transparent and can be easily computed by anyone from CPI data; (3) it can be computed at the same time as the headline inflation rate; and (4) it is in accordance with the common international practice of excluding food and energy-related components of the CPI.

• In identifying the items to be excluded, the ten most volatile CPI components were identified based on largest standard deviations for a certain sample period using the 3 and 4-digit commodity groups of the CPI data. The criteria used in selecting items to exclude was as follows: those items that are large (i.e., with CPI weight of greater than 1 percent) and volatile where volatility is not predictable (i.e., extreme price changes were neither seasonal nor pre-announced, as in the case of regulated items) and thus cannot be factored into forecasts and/or assessments of future inflation.

II. DISSEMINATION

A. Periodicity of dissemination

Published every month alongside with the existing headline inflation rate.

B. Mode and Schedule of Dissemination.

Format/Mode Schedule for the current year

• Hard copy

Press release: Five days after the reference month (Please refer to Advanced Release Calendar (ARC) for the exact dates of release).

Historical data from 1994 to 2002 are scheduled for release in June 2004.

• Electronic

E-mail: Five days after the reference month
Diskette: Five days after the reference month
CD-ROM
Website: Five days after the reference month

C. How to Access

A press release on the monthly core inflation is posted at the NSO website (www.census.gov.ph). This contains brief write-up and summary tables on the core inflation at the national level mostly covering data for the latest and previous months. Copies of press release can also be obtained by request from the Office of the Administrator, NSO (Phone:713-70-74) and from Economic Indices and Indicators Division, NSO (Phone: 715-33-47/716-39-35).

Contact division/unit/person responsible for data inquiries:

Industry and Trade Statistics Department
Economic Indices and Indicators Division
Ms. Rosie B. Sta.Ana

Telephone Number: 715-33-47
Tele-Fax Number: 716-39-35
E-mail Address: r.staana@mail.census.gov.ph

 

 

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