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Core inflation for the Consumer Price Index, the Producer Price Index or the Personal Consumption Expenditure Deflator removes the volatile food and energy prices. The Headline inflation includes these components.
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A measure of inflation that attempts to predict future inflation by excluding price volatility. It is thought to be a better measure of underlying inflation as it does not account for temporary price shocks. Some economists who measure core inflation exclude certain markets that tend to be volatile, such as energy and food, while others include all markets but exclude the markets that have had the greatest volatility over the last given period.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
A measure of consumer price increases after stripping out volatile components such as energy and food. Core inflation is generally considered more accurate than changes in the Consumer Price Index in representing the economy's underlying inflationary pressures.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.