When announcing inflation, we often hear these 2 words: Headline Inflation and Core Inflation. What’s the difference? Let’s see.
Because understanding the effects of inflation will help us plan how we spend our money. Manufacturers can plan investments and expand their businesses. If we are working people, we will be able to plan financially.
Because inflation can indicate a change in the value of our money and things. which affects all parties.
As a result, people are less motivated to deposit money and instead invest in other assets such as gold, real estate, and stocks, which have to take the high risk as well.
The potential development of the country’s production may slow down. As people have less purchasing power, spending is reduced and manufacturers are unable to sell more.
If inflation stays with us for a long time, it can cause imbalances in the country’s financial sector, cause problems for people taking more loans, and lead to asset bubbles.
It is the change in the price of the product that is calculated from all product groups. The index that reflects the changes in this type of inflation is known as the general consumer price index. The calculated products are as follows:
general consumer price index.
It is a change in product price, similar to headline inflation, but excludes the following products:
The difference between headline inflation and core inflation. Core inflation does not include raw food and energy prices. This is mainly due to the high volatility of the price because the factors affecting the price will come from external factors.
Therefore, if we hear the term “core inflation,” it means that it does not include the prices of energy and fresh food products.