The National Statistics Office (NSO) will start to release monthly core inflation rate alongside the existing “headline” inflation rate. Headline inflation refers to the year-on-year change in the overall Consumer Price Index (CPI). On the other hand, core inflation is the rate of change in the headline CPI after excluding selected food and energy items.

The introduction of core inflation has been approved by the National Statistical Coordination Board in its Resolution No. 6 dated 23 June 2003. It aims to provide a complementary measure to the headline inflation and to serve as a better gauge of the overall state of the economy. This development is in line with the statistical practice of many industrialized and developing countries. The official methodology for computing core inflation also follows the common international practice of excluding food and energy-related components of the CPI.

The official definition of core inflation is the result of inter-agency technical discussions among the NSO, the NSCB, the National Economic Development Authority (NEDA), the Statistical Research and Training Center (SRTC), the National Wage and Productivity Commission (NWPC), the Department of Trade and Industry (DTI), and the Bangko Sentral ng Pilipinas (BSP).

Headline inflation is often considered to be vulnerable to factors beyond the control of economic policy. Historically, it has the tendency to be volatile because of temporary shocks or disturbances in a particular area of the economy. The concept of ‘core’ or underlying inflation aims to filter out the effects of temporary disturbances or shocks on the CPI. Information about the general or underlying trend in consumer prices is a valuable input to economic policy, particularly monetary policy, which seeks to respond only to long term or permanent movements in prices and aggregate demand.