Colombia | Analysis of the underlying inflation through trimmed means

Summary

One of the non-forward-looking tools used for inflation analysis by central banks and academia in general is core inflation, but it may include distortions that lead to misleading conclusions. This paper explores trimmed means as an alternative.

Key points

• Key points:
• In particular, core inflation would be affected by factors that add noise and reflect greater pressures than trend inflation.
• Trend inflation is below core inflation, indicating that much of the perceived inflationary pressure is transitory in nature.
• Trend inflation is on the upside, suggesting that inflation is still expected to rise. Thus, a turning point for inflation is not reached.

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