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Underlying Inflation: Its Measurement and Significance

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Abstract

Underlying inflation is the rate of inflation that would be expected to eventually prevail in the absence of economic slack, supply shocks, idiosyncratic relative price changes, or other disturbances. Underlying inflation is a useful benchmark for monetary policy in that it provides an idea of the rate of price change that would be expected to obtain under "normal" circumstances in an economy where the level of resource utilization is putting neither upward nor downward pressure on inflation.

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  • Jeremy B. Rudd, 2020. "Underlying Inflation: Its Measurement and Significance," FEDS Notes 2020-09-18-1, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfn:2020-09-18-1
    DOI: 10.17016/2380-7172.2624
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    File URL: https://www.federalreserve.gov//econres/notes/feds-notes/underlying-inflation-its-measurement-and-significance-20200918.html
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    Cited by:

    1. Michael T. Kiley, 2023. "The Role of Wages in Trend Inflation: Back to the 1980s?," Finance and Economics Discussion Series 2023-022, Board of Governors of the Federal Reserve System (U.S.).
    2. Yoichi Ueno, 2024. "Linkage between Wage and Price Inflation in Japan," Bank of Japan Working Paper Series 24-E-7, Bank of Japan.
    3. Jeremy B. Rudd, 2021. "Why Do We Think That Inflation Expectations Matter for Inflation? (And Should We?)," Finance and Economics Discussion Series 2021-062, Board of Governors of the Federal Reserve System (U.S.).

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