Jane Galt parrots the official line on why the Fed removes food and energy prices from the consumer price index (CPI) to measure “core” inflation:

Well, the answer is that food and energy prices are very vulnerable to sudden supply shocks. … Central bankers don't need to know whether certain important goods are in short supply; they need to know whether they are printing enough, too much, or too little money … . So they strip out volatile items in order to see whether the general price level is rising too fast.

The problem with that view is that food and energy prices are part of the general price level. Discarding them is discarding relevant information.

My hypothesis is that Fed likes multiple measures of inflation mostly for PR purposes. If (like today) “core” inflation is below CPI inflation, Fed spokesmen trumpet the “core” numbers to show what a good job they’re doing. If (as when food and energy prices are falling) CPI inflation is below “core” inflation, they prefer to cite the CPI numbers.

Jane also buys into the argument that a little bit of inflation helps the economy cope with “sticky” wages. She unfortunately doesn’t mention that a little bit of inflation itself makes wages a little bit stickier. When due to increasing productivity (like in the late nineteenth century), a period of stable or even gradually falling consumer prices is not a problem.