With buying groceries and filling up at the pump being regular occurrences, we’re probably most attuned to changes in prices for food and energy than most other items that are measured in the headline Consumer Price Index (CPI) numbers.
Core CPI strips out the price of food and energy and the usual reason for citing the utility in core CPI is that it allows economists to peel back the volatile items to get a second perspective on inflation of prices in general. However, from the chart below, you can see that the volatility of food and energy is on a whole different level since 2000. You can see from 1960 to 2000 that headline and core CPI moved virtually in lock-step. But since 2000, the volatility of food and energy has been increasing, and it looks like that increase is accelerating.
Note that this chart is looking at US figures. However, the story is not much different in Canada.
Chart courtesy of J.P. Morgan Asset Management