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> Core Inflation is needed so that they can apply the right monetary policy. If you want your 'personal' inflation, they have data for that too. Why does apply
by heurisko 5y ago
> Core Inflation is needed so that they can apply the right monetary policy. If you want your 'personal' inflation, they have data for that too.
Why does applying the right monetary policy depend on excluding inflation in food and energy?
Edit: answered by dragontamer
- deltree7 5y agoThere are two kinds of inflation 1) Increase in prices because of increase in money supply 2) Increase in prices because of supply shocks (weather, strikes, supply chain, disruption) or unusual spiky demand. Core CPI is an attempt to measure (1) to ensure the money supply, which the fed controls is at balance (with their other mandate of full employment). It's a hard problem because there are lot of nuances and still we want to measure the same thing for a fair MoM or YoY comparison.