Core CPI (ex Food/Energy)

CPILFESL is Core CPI: the Consumer Price Index excluding food and energy, seasonally adjusted, published monthly by the BLS. By stripping the most volatile components, core CPI gives a cleaner read on persistent inflation trends. It is one of the most-watched data points in macro because it is the proxy the FOMC uses to assess "underlying" inflation when food and energy are providing noise.

Why it matters: Fed officials in speeches and FOMC statements regularly cite core PCE and core CPI as the relevant inflation gauges for policy. Core CPI is decomposed further into core goods (-0.2% to +0.1% MoM in normal times), shelter (currently the largest single contributor), and services ex-shelter (the "supercore" the Fed watches most). When core CPI is moving, the Fed responds; when only headline is moving on energy, the Fed typically looks through.

Core CPI ran +2.6% YoY in March 2026, with MoM SA at +0.2%, both lower than the headline +3.3%. The spread between headline and core (+70bp) is unusually wide, reflecting the energy-driven headline spike. Core has been on a slow disinflation track: from a 6.6% YoY peak in September 2022 to 2.6% in March 2026, roughly 400bp of progress over 42 months.

Sustained MoM core at 0.2% annualizes to roughly 2.4%, very close to the Fed's 2% target. This is why the four FOMC dovish dissenters on April 29 voted for cuts: core inflation is well-behaved enough to justify removing some restriction. The hawkish majority points to the headline re-acceleration and the risk that core re-accelerates if tariffs get embedded into supply chains. The June 2026 core CPI print is the next major signal.

Modern core CPI YoY peaks: 13.6% in 1980 (Volcker era), 4.4% in 1996 (pre-disinflation), 6.6% in September 2022 (modern peak). Lows: 0.6% in 2010 (post-GFC slack), 1.6% in 2018-2019. The three major core CPI drivers are shelter (CPI methodology lags real-time rents by 9-15 months), services ex-shelter (sticky supercore), and core goods (currently disinflating with some tariff-driven impulse).

First, the supercore (services ex-shelter) MoM trajectory. Sustained sub-0.25% MoM is the bull case; re-acceleration toward 0.4%+ signals the Fed is right to be cautious.

Second, shelter deceleration. Continued progress from 4%+ YoY toward the 2-3% range is the structural disinflation that lets headline meet target.

Third, three-month and six-month annualized core CPI. These remove single-month noise; sustained sub-2.5% annualized prints signal sustainable disinflation.