Core inflation remains high 

Source: https://www.bqprime.com/global-economics/euro-zone-inflation-outlook-raised-by-eu-on-surge-in-core-prices
Source: https://www.bqprime.com/global-economics/euro-zone-inflation-outlook-raised-by-eu-on-surge-in-core-prices

Helium Summary: Core inflation, which excludes volatile items such as food and energy, remains elevated in several regions, including the Eurozone [BQ Prime] and South Africa [Reuters].

Higher core inflation could lead to further monetary policy tightening and interest rate hikes, such as those anticipated by the European Central Bank [The Wall Street Journal].


May 23, 2023



Perspectives

Economists


Higher core inflation contributes to the rationale for further monetary policy tightening and interest rate hikes to control inflation

Central Banks


Monitoring core inflation in order to make informed decisions on interest rate adjustments and monetary policy actions.





Q&A



How does core inflation differ from headline inflation?

Core inflation excludes volatile items like food and energy, providing a more stable measure of price changes [CNBC].



News Media Bias (?)


The news sources seem to be focused on the implications of core inflation for central bank monetary policy, interest rates, and economic growth.

Some potential bias may arise from the focus on the possible negative consequences of higher inflation.



Context


Core inflation is considered a more stable measure of price changes than headline inflation, which includes volatile items like food and energy.



Takeaway


Persistently high core inflation could drive central banks, such as the European Central Bank, to implement additional interest rate increases and tighter monetary policy measures.



Potential Outcomes



1. Central banks tighten monetary policy and implement additional interest rate hikes (likely)

2. Core inflation eases, reducing pressure on central banks to raise rates (less likely)



Discussion:



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