Policymakers struggle to rein in sticky core inflation


Quick Take

Core inflation is the change in the cost of goods and services that do not include sectors such as energy and food.
They are dismissed due to volatile prices or can fluctuate wildly.
Core inflation in the U.S. has only declined 1% point from the peak in March 2021 — while they have a significantly tight labor market.
U.S. core inflation is at 5.54% compared to 6.41% last year.
In Europe, core inflation doesn’t slow; it continues to rise as wages grow and services remain elevated.
Economists have raised their projections for U.S. core inflation.
The same is true for the U.K., as core inflation accelerated to more than 6% from 5.7%.
The best way to fight core inflation is with positive real rates — which hasn’t happened for almost a decade.
Will they bring the economy down to combat inflation?
Euro Core Inflation: (Source: Bloomberg)US forecast core inflation: (Source: Bloomberg)UK Core Inflation : (Source: MacroBond)

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