You know, that’s a great question and it’d be great if there were one concrete definition, but… there isn’t. So, we’ll just talk about how the Federal Reserve uses it.

• The consumer price index (CPI) measures the monthly change in US consumer goods and services prices.
• Core inflation excludes food and energy, as prices can be volatile (e.g., bird flu and egg prices; the war in Ukraine and energy costs)
• Supercore inflation also excludes housing data, which lags and has been more volatile since the pandemic, per Business Insider.

What the Fed looks at…

… when it talks about supercore inflation is the price of services (e.g., getting a haircut, hiring a plumber).

Service prices have increased as consumers prioritize them over goods, and as labor shortages drive higher wages, which are passed on to the consumer.

So, prepare for more hikes

Earlier this month, Federal Reserve Chair Jerome Powell said that supercore inflation must be lowered to restore price stability, noting that “strong wage growth is good for workers but only if it is not eroded by inflation.”

And while the Fed can’t control bird flu, it can bump interest rates to cool off business growth, consumer spend, and the cost of labor, per The Wall Street Journal.

Thus — SVB debacle aside — experts expect the Fed to continue hiking rates until it reaches its 2% inflation target. Currently, one estimate pegs supercore inflation at 4.6% YoY.

BTW: There are critics of the Fed using supercore as a key metric, pointing out that food, energy, and housing… we need that stuff.