Measuring Core Inflation in Indonesia: An Asymmetric Trimmed-Mean Approach

Given the highly kurtotic and positively skewed characteristics of cross-sectional distribution of price, asymmetric trimmed-mean is the best approach in extracting the statistical medium-term trend of inflation. This paper uses asymmetric trimmed-mean approach to measure core inflation in Indonesia. This measure, as compared with the headline inflation, is more correlated with the growth of money supply in the past. Additionally, it is a reliable indicator of inflation trend.