Shocks to headline inflation drive core inflation during accommodative monetary policy.
The article explores how changes in overall prices affect the prices of goods and services without food and energy costs. Different measures of this "core" inflation were studied, showing that before 1980, changes in overall prices had a bigger impact on core inflation. This suggests that when monetary policy is more relaxed, overall price changes can influence core inflation. However, one specific measure of core inflation, the trimmed mean CPI, was not affected by overall price changes in both earlier and later years.