Because food and energy prices are volatile, it is often helpful to look at inflation excluding those two categories – known as core inflation – which is typically a better indicator of future overall inflation than recent readings of headline inflation.
But core inflation – which ran at 1-1/4 percent over the 12 months ending in October – is also well below our 2 percent objective, partly reflecting the appreciation of the U.S. dollar, which has pushed down the prices of imported goods, placing temporary downward pressure on inflation. Even after taking account of this effect, however, inflation has been running somewhat below our objective.