Headline Inflation is the raw figure that has been reported through the Consumer Price Index (CPI). The Bureau of Labour Statistics releases this figure every month. There’s a special way CPI determines the level of inflation in the Economy as a whole. It uses a base year and indexes the current year’s prices according to the values of the base year.
This is closely related to shifts in the cost of living. This gives useful information within the marketplace. Headline inflation is quoted as a monthly headline figure. The comparisons are usually made on a year-over-year Basis. This is also known as top-line inflation.
Remember that inflation poses a threat to long-term investors since it lessens the value of money. It strangles Economic Growth and rises the current interest rates in an economy. Two of the most important inflations that impact an economy is the headline inflation and core inflation. This hits the market and investors. Central banking figures use these for growth and forecasts regarding monetary policies.
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Core inflation takes out the components of the Consumer Price Index that may exhibit a great amount of volatility from month to month. This causes unnecessary issues to the headline figure. One of the main factors related to food and energy. Food prices in an economy can be largely influenced by environmental shifts that cause issues in the growth of crops. Other energy costs include oil production, trade, export and import and political factors.
The average core inflation in the United States was listed as 3.64% from 1957 until 2018. The highest inflation was recorded at 13.60% occurred in June 1980. In May 1957, the lowest rate was recorded at 0%.