ECO 304L Chapter Notes - Chapter Unit 1: Ch 1-4: Gdp Deflator, Health Care Prices In The United States, Core Inflation

• School: UT-Austin
• Department: Economics
• Course: ECO 304L
• Professor: M O S T A S H A R I, S H A L A H

Document Summary

Components of the cpi: the government also reports price indexes for components of the cpi. You will often hear reports about food, energy, or health care prices. Because food and energy prices are quite volatile from month to month, inflation statistics are often reported for the cpi e(cid:454)cludi(cid:374)g food a(cid:374)d e(cid:374)erg(cid:455). This statistic is so(cid:373)eti(cid:373)es called the (cid:862)core(cid:863) rate of inflation. The core rates of inflation for these two years were 2. 17% and 2. 51%, respectively. The big difference is likely due primarily to the high rates of increase for energy prices due to hurricane katrina and the war in iraq. Notice that the core inflation rates are not much above the 2% target that many economists consider desirable for the u. s. economy: with the se(cid:448)ere eco(cid:374)o(cid:373)ic (cid:449)eak(cid:374)ess of the (cid:862)great recessio(cid:374)(cid:863) period inflation fell even more. The core cpi in december, 2010 was 222. 187. Therefore, inflation over this period was roughly just 0. 6%.