Norges Bank operates a flexible inflation targeting regime. Under such a regime, monetary policy does not seek to steer current inflation towards the inflation target, but is oriented towards moving the forecasts for future inflation towards the target.

Under a flexible inflation targeting regime, the central bank seeks to "look through" temporary changes in inflation. At a given point in time, it can be difficult to determine which price changes are permanent and which changes are transitory. Indicators of underlying inflation can be helpful. The purpose of these indicators is to have a real-time measure of trend CPI inflation.

In this article, different indicators of underlying inflation are evaluated empirically. The conclusion is that there is no single indicator that fully measures underlying inflation, in the sense that it performs best in every category of the evaluation. This suggests that the central bank should monitor a range of indicators. Determining the rate of underlying inflation at any given point in time is ultimately a matter for the central bank's judgement.