We propose a framework for consistently evaluating core inflation measures via a straightforward application of sound … statistical inference principles. Under this framework, inflation measures (both headline and core) are regarded as estimators … tracking the economy's true, unobserved inflation rate. We depart from the arbitrary convention in the literature of …

Two rationales offered for policymakers' focus on core measures of inflation as a guide to underlying inflation are … that core inflation omits food and energy prices, which are thought to be more volatile than other components, and that … core inflation is thought to be a better predictor of total inflation over time horizons of import to policymakers. The …

Policymakers tend to focus on core inflation measures because they are thought to be better predictors of total … inflation over time horizons of import to policymakers. The authors find little support for this assumption. While some measures … of core inflation are less volatile than total inflation, core inflation is not necessarily the best predictor of total …

Using US and EU data, the present paper investigates if the core inflation, the measure of price growth obtained … excluding the more volatile items such as energy and food prices, is a good approxi- mation of the headline inflation that … issue if controlling the core inflation is still useful to anchor the medium-run inflation expectations. Using the wavelet …