Policymakers struggle to rein in sticky core inflation

Quick Take

• Core inflation is the change in the cost of goods and services that do not include sectors such as energy and food.
• They are dismissed due to volatile prices or can fluctuate wildly.
• Core inflation in the U.S. has only declined 1% point from the peak in March 2021 — while they have a significantly tight labor market.
• U.S. core inflation is at 5.54% compared to 6.41% last year.
• In Europe, core inflation doesn’t slow; it continues to rise as wages grow and services remain elevated.
• Economists have raised their projections for U.S. core inflation.
• The same is true for the U.K., as core inflation accelerated to more than 6% from 5.7%.
• The best way to fight core inflation is with positive real rates — which hasn’t happened for almost a decade.
• Will they bring the economy down to combat inflation?

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