Box Analysis A: NIESR UK Economic Outlook - Summer 2023
6 August 2023
This box reviews a number of measures that economists and policy makers have used to measure the signal in the price data and to reduce the noise. [...] The twelve-month change in the price level (ie, the annual rate of inflation) is the sum of twelve month-on-month changes. [...] The one-month change is the most volatile and the 12-month change the least. [...] Despite the most recent news of a subdued rate of increase in the core CPI in June, the filter indicates that the trend level of month-on-month core inflation is still 7 per cent at an annual rate. [...] Studies have found that the British public generally have a fairly good understanding of what inflation is, while simultaneously having a poor understanding of the causes of inflation or the Bank of England’s target for the inflation rate (Runge and Hudson-Sharp, 2020).