FRSBF: Does Headline Inflation Converge to Core

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FRSBF: Does Headline Inflation Converge to Core

#1  Postby GT2211 » Aug 07, 2011 8:40 pm

This is a very interesting study which has implications on our political response to our economic situation today. I would like to post this in the proper economics forum....unfortunately one still does not exist. :(

Recent surges in food and energy prices have pushed up headline inflation to levels well above its underlying trend. In contrast, core inflation, which excludes food and energy prices, has remained low and stable. Historical data suggest that, since the early 1990s, headline inflation has tended to converge toward core inflation. Thus, high inflation is unlikely to persist as long as inflation expectations remain anchored.


http://www.frbsf.org/publications/econo ... 11-24.html
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