"Core" Inflation Rises Only a Little Bit...

Consumer prices edged up slightly in April, but far more slowly than many economists had anticipated, the government reported Wednesday, lending credence to the view that a slowing economy is applying the brakes to inflation.

Wednesday’s report seemed to encourage investors on Wall Street, and the Dow Jones industrial average and the Standard & Poor’s 500-stock index were up about 1 percent.

Prices grew by 0.1 percent when food and energy are excluded — about half what most economists forecast — and 2.3 percent compared with the previous year.

This so-called “core” inflation rate is what the Fed tends to focus on as it adjusts interest rates, lowering them to spur economic activity and raising them when it fears rising prices.

“This is a fine inflation report if you don’t need to eat, drive or depend on your paycheck,” said Jared Bernstein, senior economist at the labor-oriented Economic Policy Institute in Washington and author of the recently released book, “Crunch: Why Do I Feel So Squeezed?” (Berrett-Koehler, 2008). Consumer Prices Rise, But Inflation Fears Ease by Peter S. Goodman

So...let's see if I understand all this.

Economists make decisions on interest-rates based on product prices for everything except food, energy and a job whose income enables the worker to buy all these other things, these core items.

The Labor Department and Wall Street celebrate when core prices rise slower than those pesky non-core things like ...food, fuel and jobs and income.

And...you're a labor-oriented economist if you connect the rising prices of food, fuel and the declining number of jobs with declining or slowly rising prices for everything that's left after you feed your family, pay for the gas to get to your job where your real income, with a job, will be slightly less this time next year.

Ok.