To gain a deeper insight into the inflationary trends of an economy, it's essential to differentiate between core and non-core inflation.

Core inflation represents the persistent and underlying price movement trend, filtering out specific categories known for their volatility and susceptibility to transient price shocks. Energy and food prices, for example, are prone to swift changes due to a multitude of unpredictable factors like weather conditions, geopolitical events, and seasonal demands.

By excluding these categories, core inflation avoids the distortion these temporary swings can cause.

The primary goal of observing core inflation is to distill the inflation trend, eliminating the noise created by short-term fluctuations.

This offers a steadier perspective of inflation, which is particularly beneficial for shaping long-term economic strategies, especially regarding monetary policy.

Central banks typically prioritize core inflation in their interest rate decisions as its considered a more reliable gauge of persistent inflationary patterns.

On the flip side, non-core inflation, also known as headline inflation, encompasses all consumer goods and services, including those prone to volatility.

This measure captures the full scope of price increases across the consumer spectrum, mirroring the immediate shifts in the cost of living that families contend with.

So despite its susceptibility to fluctuations, non-core inflation is indispensable for decoding the direct inflationary forces bearing down on consumers and plays a vital role in adjusting wages, pensions, and social security to keep pace with the cost of living.

Let's direct our attention to this graph, which paints a picture of how core and headline inflation as captured by the consumer price index or CPI have ebbed and flowed over time.

As we trace the curves on this chart, we can see that non-core CPI, our headline figure does indeed have a tendency to be more erratic.

It's important to recognize that non-core inflation doesn't consistently outpace core inflation, nor does it always accelerate more quickly.

Take for instance, the period marked by the onset of the COVID-19 pandemic.

Here we saw a noticeable dip in energy prices, which caused the headline CPI to tumble more steeply than its core counterpart.

To conclude, core inflation offers us a smoothed out perspective, free from the often wild swings of energy and food prices, while headline inflation captures the immediate and full impact of market changes directly affecting the consumer's wallet.