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Fourth Quarter 2019, 
Vol. 101, No. 4
Posted 2019-10-15

Two Measures of Core Inflation: A Comparison

by Jim Dolmas and Evan F. Koenig

Trimmed-mean personal consumption expenditure (PCE) inflation does not clearly dominate PCE inflation excluding food and energy in real-time forecasting of headline PCE inflation. However, trimmed-mean inflation is the superior communications and policy tool because it has been a less-­biased real-time estimator of headline inflation and because it more successfully filters out headline inflation’s transitory variation, leaving only cyclical and trend components.