Glossary · Economy
Core inflation
Core inflation is inflation without food and energy prices, which jump around; it shows the underlying trend of prices.
Also called: core CPI, core PCE, inflation excluding food and energy, underlying inflation
To September 2026. All items: 3.7% (Sep 2026).
The Fed’s favorite gauge, 12 months to Sep 2026.
In plain words
Gas prices can jump 20% in a month because of a storm or a war, and egg prices can double after a bird-flu outbreak, then fall back. Swings like that say little about where prices are heading overall. Core inflation leaves food and energy out, so the trend shows through the noise.
There are two main versions in the US: core CPI, from the consumer price index, and core PCE, from the PCE price index. Over the 12 months to September 2026, core CPI inflation was 2.6%. Core PCE inflation was 3.1% (Sep 2026).
Headline inflation, with everything in, was 3.7% in Sep 2026: above core.
Example
Same year, two readings
- Over a year, core prices rise 3%, food 2%, and energy falls 15%.
- Weights: core 80%, food 14%, energy 6%.
- Headline: 0.8 × 3% + 0.14 × 2% + 0.06 × (−15%) = 2.4% + 0.28% − 0.9% = 1.8%.
- Core: 3%. Cheap gas hides that most prices are rising faster.
When energy prices swing back up, headline inflation catches up; core tells you where it is likely to settle.
One level deeper
Central banks watch core because their tools act slowly: interest rates take a year or more to bite, so they should look through price swings that will reverse on their own. The Federal Reserve’s target is 2% for all-items PCE inflation, but core PCE is its best guide to where that is heading.
Core is not perfect. Food and energy are real costs, and when they stay high (as oil did in the 1970s) they leak into everything else through transport and wages. In 2021–22, headline CPI inflation peaked at 9.0% in Jun 2022, core at 6.6% in Sep 2022.
Other measures cut the noise differently: trimmed-mean inflation drops the biggest price moves each month, whatever they are, and median CPI takes the middle one. The Federal Reserve Banks of Dallas and Cleveland publish them.
Core and headline inflation since 1958
The all-items line swings with oil and food prices; the core line moves more slowly. In 2008–09 headline inflation jumped and then turned negative while core barely moved.
The numbers behind the chart
| Date | Core CPI (less food and energy) | All items |
|---|---|---|
| Jan 1958 | 2.8% | 3.5% |
| Dec 1960 | 0.7% | 1.4% |
| Dec 1970 | 6.6% | 5.6% |
| Dec 1980 | 12.2% | 12.3% |
| Dec 1990 | 5.3% | 6.3% |
| Dec 2000 | 2.6% | 3.4% |
| Dec 2010 | 0.7% | 1.4% |
| Dec 2020 | 1.6% | 1.3% |
| Dec 2022 | 5.7% | 6.4% |
| Dec 2023 | 3.9% | 3.3% |
| Dec 2024 | 3.2% | 2.9% |
| Dec 2025 | 2.6% | 2.7% |
| Sep 2026 | 2.6% | 3.7% |
Why it matters
It is what central banks use to judge whether inflation is really under control, so it moves interest rates and markets.
It helps you read the news: a big drop in headline inflation because gas got cheaper is not the same as prices calming down.
It shows how sticky inflation is: services and rents, a big part of core, change slowly in both directions.
A common mistake
Myth: Core inflation leaves out food and energy because they don’t matter.
In fact: They matter a lot to household budgets. They are left out of this one measure only because their prices swing so much that they hide the trend; the headline number, with everything in, is still the official inflation rate.
Questions people ask
Why does the Fed use core PCE?
PCE covers more of what households consume and updates its weights faster than the CPI, and leaving out food and energy makes the trend clearer. Core PCE inflation was 3.1% over the 12 months to Sep 2026.
What is supercore inflation?
A narrower cut that Fed officials began citing in 2022: prices of core services excluding housing, a gauge of price pressure that comes from wages.
Is core inflation lower than headline inflation?
It depends on food and energy prices: core is lower when they are rising fast and higher when they fall. In Sep 2026, headline CPI inflation was 3.7% and core 2.6%.
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About the numbers
- The numbers on this page are recalculated from the data every night; the sources are listed at the end of the page.
- US recessions (NBER business cycle dates): National Bureau of Economic Research (NBER), Business Cycle Dating Committee: US Business Cycle Expansions and Contractions.
- Consumer price index, all items (CPI-U): U.S. Bureau of Labor Statistics, Consumer Price Index, series CPIAUCSL; retrieved from FRED, Federal Reserve Bank of St. Louis.
- Consumer price index less food and energy (core CPI): U.S. Bureau of Labor Statistics, Consumer Price Index, series CPILFESL; retrieved from FRED, Federal Reserve Bank of St. Louis.
- PCE price index excluding food and energy (core PCE): U.S. Bureau of Economic Analysis, National Income and Product Accounts, Table 2.8.4, series PCEPILFE; retrieved from FRED, Federal Reserve Bank of St. Louis.
- Core CPI: all items less food and energy (BLS). BLS published no CPI for October 2025, so 12-month changes that need that month are missing.
- This page explains a term. It is not investment advice.