Definition of Core inflation:
Persistent and underlying inflation. There is no standard definition or measure of core inflation. While most economists and policy makers measure it by consumer price index (CPI) excluding food and energy prices, others include increases in the price of basic food items (fish, meat, fruit and vegetables) and/or wage rates in its computation.
Core inflation is measured by both the CPI and the core personal consumption expenditures index (PCE). The PCE represents the prices of goods and services purchased by consumers in the U.S. Since inflation is a measure of the trend in rising prices, PCE is an important metric in determining inflation. However, core PCE and CPI are similar, and both help to determine how much inflation is in the economy.
Core inflation is the change in the costs of goods and services but does not include those from the food and energy sectors. This measure of inflation excludes these items because their prices are much more volatile. It is most often calculated using the consumer price index (CPI), which is a measure of prices for goods and services.
How to use Core inflation in a sentence?
- Food and energy prices are exempt from this calculation because their prices can be too volatile or fluctuate wildly.
- Core inflation is important because it's used to determine the impact of rising prices on consumer income.
- Core inflation is the change in the costs of goods and services but does not include those from the food and energy sectors.
Meaning of Core inflation & Core inflation Definition