1 The more recent monthly readings have been more favorable - core prices rose 2.2 percent over the twelve months through last November, only a touch higher than the 2.1 percent rise over the previous twelve months, and this morning’s latest figures on the Consumer Price Index (CPI) suggest that this pattern continued into December.
Nevertheless, the risk to inflation continues to be on the upside until we see further confirmation in this trend toward moderation. In thinking about the macroeconomic consequences of inflation, it makes sense to look at the core rate, which excludes the prices of energy and food, when the focus is on the short run.