At Inflation's Core

Why some measures of price changes ignore food and fuel.

When the U.S. Bureau of Labor Statistics produces the consumer price index, Uncle Sam's official inflation gauge, it measures overall price changes for a basket of goods and services. The monthly stat is often referred to as "headline" inflation. The headlines lately are pretty shocking to anyone who buys groceries or gas: Food and energy prices are soaring. Food prices could rise 4% this year, and oil prices are likely to keep climbing.

So why would some economists -- including those at the Federal Reserve -- zero in on "core" inflation, an alternative CPI calculation that excludes all or most food and energy prices? Food and energy prices are volatile, more subject to extreme, short-term swings than other things we buy. Core inflation, the argument goes, provides a more accurate, long-term picture of price movement.

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Lisa Gerstner
Editor, Kiplinger Personal Finance magazine

Lisa has been the editor of Kiplinger Personal Finance since June 2023. Previously, she spent more than a decade reporting and writing for the magazine on a variety of topics, including credit, banking and retirement. She has shared her expertise as a guest on the Today Show, CNN, Fox, NPR, Cheddar and many other media outlets around the nation. Lisa graduated from Ball State University and received the school’s “Graduate of the Last Decade” award in 2014. A military spouse, she has moved around the U.S. and currently lives in the Philadelphia area with her husband and two sons.