1  1  2  Despite the recent surge, total PCE inflation is 2.3 persent over the past twelve months. BIS Review 82/2007  Because monetary policy works with a lag, however, policymakers must focus on the economic outlook.
Food and energy prices tend to be quite volatile, so that, looking forward, core inflation (which excludes food and energy prices) may be a better gauge than overall inflation of underlying inflation trends. Core inflation has moderated slightly over the past few months, with core PCE inflation coming in at an annual rate of about 2 percent so far this year.