Definition of Core Inflation Rate
What is the "core inflation rate"? What does the term "core inflation rate" mean?
The "core inflation rate" is an inflation rate that exclude certain volatile items such as food and energy.
Food and energy prices tend to be VERY volatile, as we have clearly seen over the last couple of years. Energy prices can spike as a result of increased demand or some sort of a geopolitical situation (such as the unrest in the Middle East), while food prices generally rise due to increased demand and increased energy prices.
The "core inflation" rate is generally pretty useless to the average citizen, as volatile energy and food prices will hit the average citizen's wallet or purse the most. Excluding these two items creates an inflation rate that isn't of much interest to "Joe Average".
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