If you look closely, core simply lags headline inflation, as fuel is incorporated into costs. Notice the great moderation of both and rise of both as it corresponds to oil price declines in the 1990s and rises again after 1999. Oil may not be as big a percentage of GDP as it used to be, but neither is any other single item, even an hour of labor.
CPI-U Core v. PPI Core
Producer prices are nearing the consumer price line, and have crossed a couple of times. One might imagine consternation at the Fed, particularly if you look at 1999 when something similar occurred and the beginning of 2005. Both instances were followed by Fed interest rate increases. Greenspan's right into the teeth of a big rise in oil prices, contributing to the so-called dot.com bust.PPI Headline v. PPI Core
Take a look at the spike in PPI in the latest readings. Its highest level in 25 years.Personal Consumption Expenditures (PCE) Headline v. Core
Just again to note that one leads the other. Yes, one is more volatile, but taking out food and energy does not leave a neutral track, it leaves the lagging trend. One wishes officials would not panic.
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