{"id":433823,"date":"2026-07-16T05:51:55","date_gmt":"2026-07-15T22:51:55","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/st-louis-fed-research-floats-new-way-to-measure-underlying-inflation-433823\/"},"modified":"2026-07-16T05:51:55","modified_gmt":"2026-07-15T22:51:55","slug":"st-louis-fed-research-floats-new-way-to-measure-underlying-inflation","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/st-louis-fed-research-floats-new-way-to-measure-underlying-inflation-433823\/","title":{"rendered":"St. Louis Fed research floats new way to measure underlying inflation"},"content":{"rendered":"<div>\n<p class=\"font-claude-response-body break-words whitespace-normal\">The research does not change Fed policy directly, but it lands as new Fed Chair Kevin Warsh has flagged inflation measurement as a priority, having set up task forces on data and inflation frameworks. If adopted or discussed by policymakers, a measure like this could shift how officials interpret near-term inflation data, particularly at a time when oil price swings tied to the Iran conflict are distorting headline readings. Markets watching for clues on the Fed&#8217;s rate path may pay closer attention to how officials talk about &#8220;underlying&#8221; inflation in coming meetings.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">&#8212;<br \/>\nSt. Louis Fed research suggests the Fed could better track underlying inflation by removing only gasoline and fuel prices, not food, from its core measure.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">Summary:<\/p>\n<ul class=\"[li_&amp;]:mb-0 [li_&amp;]:mt-1 [li_&amp;]:gap-1 [&amp;:not(:last-child)_ul]:pb-1 [&amp;:not(:last-child)_ol]:pb-1 list-disc flex flex-col gap-1 pl-8 mb-3\">\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">The Fed&#8217;s usual &#8220;core&#8221; inflation measure strips out both food and energy prices, but that removes a large share of consumer spending, about 12% on average<\/li>\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">The research finds gasoline and other energy goods are by far the most volatile prices in the data, far more volatile than food or household utility prices<\/li>\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">Food prices, it finds, are not especially volatile and actually move fairly closely with overall inflation, similar to other categories the Fed does not exclude<\/li>\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">A measure that excludes only energy goods like gasoline keeps almost 97% of consumer spending, compared with about 88% for the standard core measure<\/li>\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">This alternative measure closely tracks the ups and downs of overall inflation while smoothing out short-lived spikes driven by oil prices<\/li>\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">The research notes 2026&#8217;s rise in headline inflation was driven largely by oil prices tied to the Iran conflict, but a more moderate rise even in this alternative measure suggests other inflationary pressures are also at play<\/li>\n<\/ul>\n<p class=\"font-claude-response-body break-words whitespace-normal\">\nNew research from the Federal Reserve Bank of St. Louis suggests the Fed could get a better read on underlying inflation by excluding only gasoline and other energy goods from its inflation measure, rather than stripping out both food and energy entirely. According to St. Louis Fed economist Fernando M. Martin, the central bank&#8217;s standard &#8220;core&#8221; inflation gauge, which removes food and energy, gives a smoother picture of price trends but throws out a sizable chunk of consumer spending in the process.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">Martin&#8217;s analysis finds that gasoline and other energy goods are dramatically more volatile than any other price category, largely because they track global oil prices so closely. Food prices, by contrast, are not particularly volatile and tend to move in line with overall inflation, similar to categories like clothing or transportation that the Fed does not exclude. Household utility prices such as electricity and gas sit in between, more volatile than food but far calmer than gasoline.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">Based on this, Martin proposes a measure that excludes only energy goods rather than all food and energy. This approach keeps about 97% of consumer spending in the index, compared with roughly 88% under the standard core measure, while still smoothing out the sharp, short-lived swings driven by oil markets. Martin&#8217;s analysis shows this alternative tracks overall inflation trends closely and would have still captured the post-pandemic stall in inflation that was partly masked in the headline figure by swinging oil prices.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">The research comes as new Fed Chair Kevin Warsh has made inflation measurement a focus early in his tenure, setting up internal task forces on data and inflation frameworks. Martin notes that 2026&#8217;s jump in headline inflation was driven largely by oil prices tied to the conflict in Iran, but a more moderate rise showing up even once energy goods are excluded suggests other inflationary pressures may persist even as oil markets calm down.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">\n<p>                            This article was written by Eamonn Sheridan at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The research does not change Fed policy directly, but it lands as new Fed Chair Kevin Warsh has flagged inflation measurement as a priority, having set up task forces on data and&hellip;<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-433823","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/433823","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=433823"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/433823\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=433823"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=433823"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=433823"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}