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A measure of price change that leaves out specified categories, commonly food and energy.
Save conceptCore is a measure designed to make underlying price movements easier to see by excluding selected volatile items. In commonly reported US and measures, it excludes food and energy. Other countries and institutions can use different definitions, so core should be read with the specific index’s coverage in mind.
Food and energy prices can change sharply because of harvests, weather or international commodity markets. Removing them can help analysts examine broader price pressure. It does not make those purchases unimportant to households. Core can also be influenced by persistent movements in housing, services and other included categories, rather than providing a perfectly clean signal.
Suppose the cost of a hypothetical basket excluding food and energy rises 3% over a year, while the full basket rises 5% because fuel becomes much more expensive. The core measure is 3% and the headline measure is 5%. A household that buys fuel still experiences the fuel increase; the core number is an analytical measure, not that household’s complete cost-of-living change.
Core is not a promise that headline will soon match it. It can remain elevated when headline falls, or move in the opposite direction. Also distinguish exclusion-based core measures from trimmed-mean or median measures, which use different methods to reduce the influence of extreme price changes.
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