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expectations. for example, from 1987 to 2002, energy price shocks appear to have been temporary in that energy prices were mean reverting ; as a result, in this period, the average difference between core and headline pce inflation was quite small. since 2002, however, the effect of energy price shocks have been more persistent, and headline inflation has averaged more than 1 / 2 percentage point above core inflation over this period. over the past year, energy prices have about leveled off on balance – or at least that was the case until a couple of weeks ago – and the rate of headline inflation for most of this year has come down close to that for core, one hopes alleviating the risk of second - round effects. but the increases in oil prices in recent days provide another reminder that shocks can persist longer than one might have at first expected. a prolonged divergence between core and headline measures of inflation could complicate central bank communications with the public because core inflation would require some adjustment before it would provide a clear gauge of underlying inflation. for example, the weighted median cpi inflation rate, one popular measure of core inflation, has tended to be a biased measure of headline inflation. the weighted median is exactly equal to owners'equivalent rent nearly half the time because that component has an extremely large share of the consumption basket and fairly low volatility ( bryan and pike, 1991 ; hogan and others, 2001 ; and bryan and meyer, 2007 ). however, the productivity growth rate in residential construction is not terribly high, and so this sector is likely to have below - average productivity growth and above - average price increases. indeed, the weighted median cpi exceeded overall cpi inflation on average by 1 / 4 percentage point per year over the decade from 1992 to 2002, a period when energy prices were transitory. of course, to the extent that such a bias in a core inflation measure is stable or predictable, the central bank could easily take this into account in setting monetary policy. but even in that case, differences in average rates of inflation between the core measure and overall inflation could complicate communication with the public. conclusion i have argued that a measure of core inflation that is easily understood and provides some greater signal about persistent movements in inflation than does headline inflation itself is extremely valuable for the conduct of monetary policy, and that is why the federal reserve pays so much attention to such measures. however, i have also argued that core measures have their limitations. a single core inflation measure cannot account for