What Is Core CPI? Definition, Formula, and What It Leaves Out

The short answer

Core CPI is the Consumer Price Index (CPI) minus its food and energy components. The Bureau of Labor Statistics (BLS) publishes it monthly as "all items less food and energy," usually alongside the headline CPI. The purpose is to strip out the two categories that swing most on weather, geopolitics, and supply shocks, leaving a cleaner read on underlying inflation. It is not a cost-of-living index for any specific household. It is a fixed-basket price index with two large categories removed.

You can see the live series, its formula, and its source on the Core CPI page.

How core CPI is calculated

Start with the same monthly price survey that feeds headline CPI. The BLS collects prices for a fixed market basket of goods and services, then weights each item by its share of consumer spending. Core CPI drops food and energy from that basket, which removes roughly a fifth of the index weight depending on the year, and renormalizes the remaining weights to sum to 100. The published figure is an index level, not a percentage. The number you hear on the news is the year-over-year percent change in that index.

Formula, stated plainly:

Core CPI year-over-year = (Core CPI index this month / Core CPI index 12 months ago - 1) x 100

Month-over-month uses the previous month instead of the same month a year earlier. The BLS also publishes a three-month annualized rate, which takes the latest three monthly changes and scales them to a yearly rate. That last one is noisier but reacts faster to turning points.

Release schedule and lag

Core CPI comes out with headline CPI, usually in the second week of the following month, around 8:30 a.m. Eastern. The release covers the previous month, so there is a lag of roughly two to five weeks. The BLS publishes a full news release with tables and a technical note. Seasonal adjustment factors are updated once a year, typically with the January release, which can revise the recent monthly pattern. The index level itself is not revised after publication, but seasonal factors are.

What counts as high or low

There is no official threshold. The Federal Reserve's longer-run inflation target is 2 percent, but that target is stated for the personal consumption expenditures (PCE) price index, not CPI. Core CPI has run above core PCE for much of the past two decades, partly because of how shelter and medical care are weighted. As a rough reference, the 2010s saw core CPI year-over-year mostly between 1.5 and 2.5 percent. Readings persistently above 3 percent are unusual relative to that decade. Readings near or below 1 percent are also unusual and have historically appeared during severe downturns. These are descriptions of the past, not forecasts.

What core CPI does and does not tell you

Core CPI tells you how fast a fixed basket of non-food, non-energy consumer prices is changing. It does not tell you how fast your own cost of living is changing. It does not measure asset prices, wages, or producer costs. It also does not capture substitution: if beef gets expensive and households buy chicken instead, the index still tracks the beef price in its fixed basket. Because shelter is the largest single component of core CPI, a change in the BLS rent methodology can move the index without any change in what tenants actually pay that month. The index is also not seasonally adjusted in its raw form; the seasonally adjusted version is the one usually quoted.

Common misreadings

The first misreading is that core CPI excludes food and energy because they do not matter. They matter a great deal to households. The exclusion is a volatility filter, not a claim about importance. The second is that core CPI is the Fed's preferred gauge. The Fed's stated target is based on PCE inflation, which is a different index with different weights and a different source. The third is that a single monthly print is a trend. Monthly core CPI changes are noisy; three-month and twelve-month averages are more stable. The fourth is that core CPI is never revised. The index level is not revised, but seasonal factors are, and those can change the month-to-month pattern after the fact.

When this does not apply

This definition does not apply if you are trying to measure inflation for a specific household, a specific region, or a specific currency area. Core CPI is a national US index. It also does not apply if you need the Fed's target measure; that is PCE inflation. And it does not apply if you are looking for a real-time read on prices, because the release lags the reference month by weeks and the seasonal adjustment is fixed for the year. For a broader view of how the headline number is built, see the CPI year-over-year page. For the Fed's preferred measure, see the PCE inflation page.

FAQ

Q: What is core CPI in simple terms? A: It is the Consumer Price Index with food and energy removed, published by the BLS as "all items less food and energy." It is meant to show underlying inflation by dropping the two most volatile categories.

Q: Is core CPI the same as CPI? A: No. CPI includes food and energy. Core CPI excludes them. Both are published monthly by the BLS from the same price survey.

Q: Why does the Fed look at core inflation? A: The Fed's stated longer-run target is 2 percent for PCE inflation, not CPI. It watches core measures because food and energy prices are volatile and can obscure the underlying trend. The Fed does not target core CPI directly.

Q: What is a normal core CPI reading? A: There is no official normal. In the 2010s, core CPI year-over-year mostly stayed between 1.5 and 2.5 percent. Readings outside that range are not rare, but they are less common. Past ranges are not predictions."

FAQ

what is core CPI in simple terms

Core CPI is the Consumer Price Index with food and energy removed, published by the BLS as "all items less food and energy." It is meant to show underlying inflation by dropping the two most volatile categories.

is core CPI the same as CPI

No. CPI includes food and energy. Core CPI excludes them. Both are published monthly by the BLS from the same price survey.

why does the Fed look at core inflation

The Fed's stated longer-run target is 2 percent for PCE inflation, not CPI. It watches core measures because food and energy prices are volatile and can obscure the underlying trend. The Fed does not target core CPI directly.

what is a normal core CPI reading

There is no official normal. In the 2010s, core CPI year-over-year mostly stayed between 1.5 and 2.5 percent. Readings outside that range are not rare, but they are less common. Past ranges are not predictions.