<h2>Core Rate of Inflation</h2>
<p>The core rate of inflation is a measure of inflation that excludes volatile prices of food and energy. It provides a more stable indicator of underlying inflation trends.</p>

<h2>How It Works</h2>
<p>The core rate of inflation is calculated by subtracting the food and energy components from the Consumer Price Index (CPI). This exclusion is based on the assumption that these items' prices fluctuate more significantly due to factors like weather, geopolitical events, and seasonality.</p>
<p>Here's a simple breakdown:</p>
<ul>
  <li>Calculate the CPI, which includes all items in the consumer basket.</li>
  <li>Calculate the CPI excluding food and energy.</li>
  <li>Subtract the second figure from the first to find the core rate of inflation.</li>
</ul>

<h2>Why It Matters</h2>
<p>The core rate of inflation is a crucial indicator for central banks and economists. It helps them understand the true underlying inflationary pressure in the economy, independent of short-term price volatility. For instance, the U.S. Federal Reserve targets a 2% inflation rate, measured by the core Personal Consumption Expenditures (PCE) price index, as a sign of a healthy economy.</p>