Core Inflation


 
 
Concept Explanation
 

Core Inflation

  • Another way to analyses inflation data is by looking at "core inflation," which is generally a chosen measure of inflation that excludes the more volatile categories like food and energy prices. The main argument here is that the central bank should effectively be responding to the movements in permanent component of the price level rather than temporary deviation.
  • Since core inflation is derived from the headline, it reflect the weaknesses in the primary measure of inflation
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