the cpix measure adjusts for indirect taxes. when an indirect tax is raised, it is assumed that the price of the product concerned increases by the entire amount of the tax. but in practice the company or shop selling the product can rarely increase the price by the full amount ; usually only by a part of it. demand would otherwise decline too much. but when the cpix is calculated, the entire tax increase is deducted. an increase in indirect taxes can thus have the paradoxical effect that the cpix falls. another complication is that excise duty is normally written up by some measure of price movements. this in turn is because the tax on, for instance, alcohol is not expressed as a percentage of the price but as sek per litre. correspondingly, the taxes on energy and tobacco are stated in terms of sek per kilowatt - hour and sek per gramme. if all prices rise by 2 per cent a year, then the excise duty's share of the consumer price would fall over time. to prevent this from happening, excise duties are indexed. the excise duty on, for instance, petrol is written up by the annual rate of increase in the cpi in june of the previous year. but when the cpix is calculated, each increase in excise duties is deducted from the cpi, even if it is only due to indexing. this means that the indexing of excise duties also contributes to a difference in cpi inflation and cpix inflation in the long term. the effect is not assessed as very large ; 1 percentage point. but together with the 0. 2 percentage points that are due to price changes in the housing stock, this means that the rate of increase in the cpix will be lower than the rate of increase in the cpi by 0. 3 percentage points. there will thus be a long - term difference between the cpi and the cpix which is due to other things than the riksbank adjusting the interest rate. the cpix is not up to standard and will be phased out let me pause a minute and summarise before i move on. in addition to our target variable, the cpi, the cpix is the measure that is emphasised the most. but as i have described here, there are several reasons why the cpix should no longer hold this position. the most important reason is that the average rate of increase in the cpi and the cpix will differ substantially in the future.

for alternative measures of inflation in general. i shall also describe how the role played by the cpix in our analysis has changed over time. then we will come to what the phasing out of the cpix means for monetary policy. different measures of inflation are needed the riksbank has a target defined in terms of the change in the cpi. however, the development in the cpi cannot always guide monetary policy on its own – there is no such universal measure. it is therefore necessary to supplement the analysis by using different measures of underlying inflation. most central banks do this, including the riksbank. the arguments in favour of using various alternative measures of inflation mainly concern understanding and illustrating which components have a lasting effect on prices. inflation is often affected by temporary shocks which we do not try to counteract with monetary policy. in such a situation it is appropriate to highlight different measures of inflation to analyse and illustrate both what has already happened and what is expected to happen in the future. to describe price trends and justify monetary policy decisions we therefore make use of various measures of underlying inflation when necessary. different measures are more suitable than others on different occasions. for example, it has recently been important to demonstrate how important energy and food prices have been for developments in the cpi. we also wish to be able to analyse and describe inflation adjusted for the direct effects of our own policy. our most important tool for doing this has so far been the measure known as the cpix. thus, it is often valuable to use different measures of underlying inflation, not least because it makes it easier to see what factors are driving the cpi. it is quite natural for us to work in this way internally in our analyses. but it can create some problems in our external communication, particularly if a certain measure is given a long - term prominent role. it can create uncertainty as to how the inflation target is defined in practice. until one year ago i myself sat “ on the outside ” and monitored the riksbank ’ s policy making. and i must confess that i thought it was a little unclear which measure of inflation the riksbank actually used in formulating its policy. this was connected with the prominent role the cpix had played in the riksbank ’ s analysis and rhetoric. the cpix – how it began the cpix is a measure of inflation that has been around a long time. it was included in the predecessor to the monetary policy reports, “ inflation and inflation expectations in sweden ”