Core Consumer Price Index (CPI)

Core CPI: A Measure of Inflation

The Core Consumer Price Index (CPI) is a measure of inflation that excludes the prices of food and energy. These items are volatile and can distort the overall CPI reading. By excluding them, the Core CPI provides a better picture of the underlying inflation trend.

Importance of Core CPI

The Core CPI is closely watched by economists and policymakers as it is a key indicator of the health of the economy. A rising Core CPI can signal that inflation is increasing, which can lead to higher interest rates and slower economic growth. Conversely, a falling Core CPI can indicate that inflation is moderating, which can lead to lower interest rates and faster economic growth.

Recent Core CPI Data

According to the Bureau of Trade and Economic Indices (BETEI), the Core CPI increased by 0.25% in July 2023. This was slightly higher than the expected increase of 0.24%. The increase was driven by higher prices for housing, transportation, and medical care.

Conclusion

The Core CPI is a valuable tool for economists and policymakers to assess the underlying inflation trend. It provides a more accurate picture of price changes than the overall CPI, as it excludes volatile items such as food and energy. By monitoring the Core CPI, economists and policymakers can gain insights into the health of the economy and make informed decisions about monetary and fiscal policy.