Excluding food prices from inflation measures can lead to higher expectations.
Food prices play a crucial role in inflation, especially in lower income countries where they are more volatile and higher than nonfood prices. Ignoring food prices in inflation measures can lead to inaccurate forecasts and delayed policy responses. Excluding food prices from core inflation can misrepresent the true inflation trends, causing higher inflation expectations. Policymakers should consider including food prices in core inflation measures to get a more accurate picture of inflation.