Here are the indicators on the Canadian central bank’s radar, when it comes to tackling high inflation.
Core inflation measures the change of CPI and excludes food, energy and the effects of changes in indirect taxes like GST.
"In setting monetary policy, the Bank seeks to look through such transitory movements in total CPI inflation and focusses on ‘core’ inflation measures that better reflect the underlying trend of inflation,” aCPI-trim is one of the three different measures of core inflation. It aims to filter out extreme monthly price fluctuations by taking out 40 per cent of the total CPI basket, with 20 per cent from the top and another 20 per cent from the bottom.
“This approach is similar to CPI-trim as it eliminates all the weighted monthly price variations at both the bottom and top of the distribution of price changes in any given month, except the price change for the component that is the midpoint of that distribution,” it said on . It measures core inflation corresponding to the change at the 50th percentile of the CPI basket weights.CPI-common is the third measure of core inflation that the Bank of Canada takes into consideration with its key monetary policy. It uses a “factor model” to find common price changes in different CPI categories, which it uses to filter price movements caused by some factors. But some groups have said the Bank of Canada should retire its use of CPI-common.
. The data is delayed by about two months and it contains additional detail on labour, with estimations on earnings and hours worked. It’s also a gauge on the monthly change in non-farm payroll employment.This is a measure of the long-run average inflation expectations from market participants. It compares the yields of selected long-term bond issues and Real Return Bonds on the last Wednesday of the month.
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Bank of Canada: Here are the top inflation indicators taken into consideration - BNN BloombergHere are the indicators on the Canadian central bank’s radar, when it comes to tackling high inflation.
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