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Federal Reserve Bank of San Francisco
FRBSF Economic Letter
Does headline inflation converge to core?
Zheng Liu
Justin Weidner
Abstract

Recent surges in food and energy prices have pushed up headline inflation to levels well above its underlying trend. In contrast, core inflation, which excludes food and energy prices, has remained low and stable. Historical data suggest that, since the early 1990s, headline inflation has tended to converge toward core inflation. Thus, high inflation is unlikely to persist as long as inflation expectations remain anchored.


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Zheng Liu & Justin Weidner, "Does headline inflation converge to core?" , Federal Reserve Bank of San Francisco, FRBSF Economic Letter, number 24, 2011.
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Keywords: Inflation (Finance)
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