Since I have a long daily commute and do most of the family grocery shopping I've been amazed at the jump in both food and gas prices.  $0.70 a gallon increase in gas over the last month and a $0.30 a gallon increase in milk over the last six weeks have honestly been quite alarming, nevertheless, everytime I catch the news I'm reminded that while both food and gas prices are spiking, the core inflation rate hasn't budged so I have nothing to worry about?  This is what Barry Ritholtz has called "inflation ex-inflation", meaning except for inflation, there's no inflation. 

Since the mid-1970's, the Fed has been preoccupied with core inflation, the consumer price index stripped of items prone to volatile price increase, like oil and food, the idea being that temporary price shocks are not necessarily representative of inflationary pressures in the economy as a whole.  This I can understand, but its hard to fathom how you totally discount the effects of what are becoming large regular increases in the cost of food, transportation, energy and medicine at a time when most people's salaries and wages aren't even keeping up with core inflation?  Also, its clear that so-called volatile prices in most of the aforementioned areas aren't just spiking and returning to lower levels, but are remaining higher in most cases.  For instance, five years ago the most I spent on a gallon of gas was maybe $1.30, but even with seasonal adjustments I don't think I would have expected that same gallon of gas would cost at least a dollar more a gallon and almost never go below $2.00 a gallon which is where we've been at least the last couple years.   Sure, by concentrating on core inflation it means the Fed doesn't feel the need to raise interest rates every time gas hits $3.50 a gallon, but the cognitive dissonance is real and I think its easy to see why most polls show Americans don't believe the economy is doing well or the country is going in the right direction.  That doesn't mean core inflation isn't a useful tool to financial analysts and policymakers, it just means its increasingly irrelevant to everyone else.