What is the difference between Core Inflation and Headline Inflation?

When announcing inflation, we often hear these 2 words: Headline Inflation and Core Inflation. What’s the difference? Let’s see.

Let's first understand the importance of inflation.

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.

impact on people or ourselves.

When inflation increases, the price of goods also increases. This may cause people to have insufficient income to cover their expenses.
decrease the value of money Originally, 100 baht was used to buy 2 meals. Later, when the inflation rate increases, it can only buy 1 meal, which results in the interest rate on deposits that cannot compensate for inflation.

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.

impact on entrepreneurs.

when the price of the product increases It means that the price of raw materials must be more expensive as well. That may cause the company’s sales to decline and may result in a reduction in employment.
The price of goods exported will also be higher. Therefore, it is at a disadvantage compared to other countries.

impact on the country.

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.

Differences between Headline Inflation and Core Inflation in the Summary

1. Headline Inflation or general inflation

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.
- Food and non-alcoholic beverages.
- Rice flour and flour products
- Meat, poultry and aquatic animals
- Eggs and dairy products.
- fruits and vegetables.
  - fresh vegetables
  - – fresh fruit
- food ingredients
- non-alcoholic beverages.
- Consumer food-in the house
Other categories other than food and beverages
apparel and footwear categories.
housing category
Category of treatment and personal services.
- Transportation and communication category
- Fares for public transportation
- Fuel
communication
Entertainment, reading, education
Category of tobacco and alcoholic beverages

2. Core Inflation

It is a change in product price, similar to headline inflation, but excludes the following products:

Fresh food and energy
- Fresh food
- Energy

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.