Core inflation
Definition. Core inflation is a measure of underlying inflation that excludes items whose prices are especially volatile, so it reflects the persistent trend in the general price level. In Singapore it is calculated by removing the costs of private transport and accommodation from the consumer price index.
Because it strips out temporary swings, central banks watch it closely when setting policy. The Monetary Authority of Singapore treats core inflation as a key target for its exchange rate policy.
This term belongs to Measuring Inflation and the CPI in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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