Question

What is difference between core and non-core CPI (and other measures)?

Answer 1

CPI is the core price index.It is the measure to calculate the cost of living for a single person and this factor is based on the monetary policy.The core CPI calculates both the food and the energy.Sometimes when monetary policy decisions are take based on the temporary inflation thefe will be a downfall in the economy because those are not only the factors to be considered.In the sams way when the food and energy are slumping down and there is a change in monetary policy it can go too low causing issues in the near future for the inflation factors.It is also important to keep an watchout for the tax as this is a factor through which the underlying inflation can be figured out.Tax is one of the factors to see the price level rise in the coming years.There are two types of CPI and they are CPI-W and CPI-U.The first one is for the urban wage earners and clericals and this reflects the benefits cost paid to the social.The CPI-U is for the urban consumers and the self employed,below poverty line and unemployed this includes all.The difference both is that it has weight assigned to it on their geographic region.The groups are divided into different categories like the following food,apparel,medical care and transportation.Its calculated as : CPI/Cost of market basket in year*100.Inflation occurs in the non components of the non CPI,continuous pressure in the inflation will not be able to moderate the wages and it will go higher than the expected levels.In the meantime the supplying of money should be lowered as the low level of unemployment will not be able to abate it and this could lower the risk of the higher interest rates.The federation should generally look at the inflation of good anc services that will be the core inflation and those that are seasonal are the non core inflation.The core and non core are together called as the total inflation.The core inflation is what is considered as it does not involve the seasonal only and hence there would be no change according to the season.The core inflation is also called as the underlying inflation and thus is not seasonal.