Core and Non-Core Inflation Measures in Kenya
About Report
Overview
The Kenya National Bureau of Statistics (KNBS) produces the Consumer Price Indices (CPI) and publishes headline inflation. The Central Bank of Kenya (CBK), one of the main users of CPI data, uses inflation data to assess its primary objective of ensuring stability in general level of prices of goods and services in the economy. Price stability promotes long-term planning, investment and economic growth. Headline inflation contains price changes of some commodities that are subject to price volatility from time to time, due to weather changes, shocks in the global economy, and other supply side factors.
Core inflation is a measure of inflation that excludes prices of highly volatile commodity items. Core inflation provides a relatively stable measure of inflation that abstracts from the impact of extreme price volatility associated supply side factors. Hence, it is often described as a measure of underlying inflation that mainly captures structural changes in the economy. It is a more reliable measure of inflation commonly used by central banks to inform monetary policy decisions and communication with the public.