In an op-ed with a great title, Greg Mankiw reviews the Bernanke years at the helm of the Fed thus far. He mentions the Fed's focus on the core rate of consumer inflation, excluding food and energy, which might be one of the more inscrutable tenets of central banks.
Here's a look at some recent inflation history, with the top chart showing the levels of the core Consumer Price Index (CPI) alongside the energy and food indexes, and the bottom chart showing a 12-month moving average of the monthly inflation rate in each. Energy prices really steal the show, but food prices are also a bit more volatile than the core rate. Inflation in food and in energy prices both peaked in the summer of 2008 and turned around rather sharply, leading to disinflation and even (slight) deflation in both while trends in the core rate were much more subdued.
