Core inflation

One way of accomplishing this is by excluding items frequently subject to volatile prices, like food and energy.

The concept of core inflation as aggregate price growth excluding food and energy was introduced in a 1975 paper by Robert J.

The core inflation model was subsequently developed and advocated by Otto Eckstein, in a paper published in 1981.

[2] According to the economic theory historian Mark A. Wynne, "Eckstein was the first to propose a formal definition of core inflation, as the 'trend rate of increase of the price of aggregate supply.

Economic variables adjusted by this price deflator are expressed in chained dollars, rather than the alternative constant-dollar measure based on a fixed goods' basket.

The PCE chain-type index is constructed from a formula that reflects the changing composition of spending and thereby avoids some of the upward bias associated with the fixed-weight nature of the CPI.