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Economic Definitions of Inflation Topics

Here are core definitions when discussing the topic of inflation (courtesy of the Bank of Canada)

CPI inflation
A measure of price movements, produced by Statistics Canada and obtained by comparing the retail prices of a representative “shopping basket” of goods and services at two different points in time. Learn more

Core inflation
Year-over-year growth in a variant of the CPI that excludes the eight most volatile components —which account for 19 per cent of the CPI basket—(fruit, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation, and tobacco products) as well as the effect of changes in indirect taxes on the remaining components.


CPIW
In this measure, each component of the total CPI is multiplied by an additional weight that is inversely proportional to the component’s volatility, so that the more volatile the component the less it influences the overall index. CPIW is adjusted to exclude the effect of changes in indirect taxes. The indirect tax effect for CPIW is assumed to be the same as for CPIX. For more details on this measure, please see: Core Inflation by Seamus Hogan, Marianne Johnson and Thérèse Laflèche.

MEANSTD
This measure is the weighted average of the cross-sectional distribution of price changes that has been trimmed to exclude values farther than 1.5 standard deviations from the average. MEANSTD is adjusted to exclude the effect of changes in indirect taxes.

Weighted median
This measure of trend inflation corresponds to the percentage change in the CPI component at the midpoint of the cross-sectional distribution of weighted price variations. This median price varies from month to month. Weighted median is adjusted to exclude the effect of changes in indirect taxes.

Chain price index for GDP
Price index for GDP, equivalent to the ratio of the value to the volume of GDP, with the volume estimated using a chain Fisher formula.

Chain price index for consumption
Price index for consumption, equivalent to the ratio of the value to the volume of consumption, with the volume estimated using a chain Fisher formula.

Chain price index for consumption excluding food and energy
Calculated as the ratio of the value to the volume in chain 1997 dollars of consumption (v1992115) excluding the following items:

* Food and non-alcoholic beverages (v1992070)
* Alcoholic beverages bought in stores (v1992071)
* Electricity(v1992081)
* Natural gas (v1992082)
* Other fuels (v1992083)
* Motor fuels and lubricants (v1992099)

Note that the Bank uses a chain Fisher formula for calculating the volume of consumption excluding food and energy.

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