Core Inflation is One Constant in Economy

By Rex Nutting, MarketWatch

For all the concern policymakers and investors show about inflation, it’s been one of the most remarkably stable economic indicators in the past decade.

The economy may boom and bust. The stock market can soar, crash, and then crawl back. The price of crude oil can go from $20 to $10 to $30 to $20 and then to $60. The Federal Reserve can slash interest rates to four-decade lows and then raise them for 14 straight meetings.

But through it all core inflation (consumer price index version) barely budges.

Core inflation has risen 2.2% in the past year, exactly the average over the past 10 years, near the upper end of what the Fed is now shooting for. In the past 10 years, the trend in core inflation has never been higher than 3%, or lower than 1%.

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