Kerninflation

Kerninflation, or core inflation, is a measure of the rate at which prices for goods and services change, excluding items with highly volatile prices. In many contexts it is defined as the change in a consumer price index (CPI) or harmonized index (HICP) after removing the effects of food and energy, which are prone to temporary shocks. The concept aims to capture the underlying, persistent trend in inflation.

Measurement methods vary. The most common approach uses CPI or HICP excluding food and energy. Alternative variants remove additional categories or apply statistical techniques such as trimmed-mean or weighted-median measures that suppress the influence of extreme price moves. These approaches are designed to provide a smoother signal of inflation that is less affected by short-term volatility.

Purpose and usage. Central banks and economists monitor kerninflation to assess underlying inflation pressures and to inform monetary policy decisions. Because it tends to be more stable than headline inflation, core inflation is often viewed as a better indicator of the persistence of inflation and as a forecast signal for future price developments.

Limitations. Core inflation is not a perfect proxy for overall inflation. It can respond more slowly to widespread price changes, and its composition depends on the chosen method, which can lead to divergent signals across measures. It may also understate inflation if durable price pressures are spreading beyond the volatile components, or if services inflation is driven by structural factors rather than temporary shocks.

Context. In German-language literature, kerninflation is commonly used to denote the underlying inflation trend, with definitions typically involving the CPI or HICP excluding energy and food. It remains one of several tools used to interpret inflation dynamics alongside headline measures.