Core inflation measures not reliable predictors of total inflation, study finds.
Core inflation measures are often used to predict total inflation, but our research shows that they may not always be the best indicators. While some core inflation measures are less volatile than total inflation, they don't always accurately predict total inflation. The effectiveness of forecasting models using core inflation versus total inflation depends on the specific inflation measure and time horizon. Our study also provides a way to measure the statistical significance of the difference in forecast errors.