Well, everyone is relieved now after today´s inflation report. Sure, the CPI rose 0,6% over the last month and 3,1% over the last year, both the highest number for years, but this number seem irrelevant. The core index rose only 0,2% m/m and 1,7% y/y so inflation is “really” under control so the Fed will now most likely only raise interest rates with 25 basis points at their next meeting. This reaction reminds me of Murray Rothbard´s excellent article on the issue of the “core” index. In addition to Rothbard´s excellent critique it could be added that it is rather strange to exclude food prices. The official motive for looking at the core index is the strong volatilty of energy prices, but the total food price index (As opposed to some individual food price items) has not been more volatile than many “core” indexes.
Core hoax
