Current Issues in Economics and Finance

Core CPI: Excluding Food, Energy . . . and Used Cars?

April 1996Volume 2, Number 4
JEL classification: E, O

Authors: Richard W. Peach and Karen Alvarez

Although used car prices represent only a small portion of the consumer price index, their extreme volatility has had a major impact on the measured inflation rate. To explain this relationship, the authors describe how used cars are treated in the CPI and explore what might cause the wide swings in used car prices.

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