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The Behaviour of Consumer Prices Across Provinces

Author

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  • Gordon Wilkinson

Abstract

Measures of core inflation enable a central bank to distinguish price movements that are transitory and generated by non-monetary events from those that are more permanent and related to prior monetary policy decisions. The author uses standard statistical measures to assess the behaviour of consumer prices across provinces and identify price components with more divergent price patterns. The results indicate that energy, shelter and tobacco prices are the most volatile across provinces. Very large price movements restricted to one or a few provinces suggest that the forces or events triggering those movements may be province specific and unrelated to national demand pressures. Such results suggest that constructing a type of core inflation measure called the “trimmed mean” that excludes components with exceptionally large price changes at the provincial level may offer an alternative means of assessing underlying inflationary pressures.

Suggested Citation

  • Gordon Wilkinson, 2011. "The Behaviour of Consumer Prices Across Provinces," Discussion Papers 11-2, Bank of Canada.
    • Handle: RePEc:bca:bocadp:11-2
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    References listed on IDEAS

    as
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    6. Joanne Cutler, 2001. "Core Inflation in the UK," Discussion Papers 03, Monetary Policy Committee Unit, Bank of England.
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    More about this item

    Keywords

    Inflation and prices;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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