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Core Inflation Rate
3.3%
Core inflation, measured by the Consumer Price Index excluding food and energy prices (Core CPI), is a sophisticated economic indicator calculated monthly by the Bureau of Labor Statistics. This metric removes volatile components—food (approximately 14% of total CPI) and energy (about 7%)—to reveal underlying inflation trends. The Core CPI tracks price changes across eight major categories: housing (42% weight), transportation excluding fuel (15%), medical care (9%), education and communication (7%), recreation (6%), apparel (3%), and other goods and services (3%). The Federal Reserve particularly emphasizes this measure when conducting monetary policy, as it better reflects persistent price pressures and helps predict future inflation. The calculation methodology involves surveying prices for about 80,000 items monthly across 23,000 retail and service establishments in 75 urban areas. Price changes are weighted using the Consumer Expenditure Survey, which tracks actual household spending patterns. Understanding core inflation is crucial for investors, policymakers, and businesses, as it influences interest rates, wage negotiations, and long-term economic planning. Historical data shows core inflation averaging approximately 2% annually since 2000, though periods of significant deviation occur during economic shocks or policy changes.
ECONOMY