Markets trade the core CPI, not the headline. The BLS strips out food and energy because those two categories are volatile and mean-reverting — a 20% oil spike tells you little about underlying demand pressure. Core CPI is the number the Fed's models weight most heavily.

Key mechanics to know:

Headline CPI includes all ~80,000 items in the basket; core excludes food (≈13.5% weight) and energy (≈6.5% weight).
Shelter (owners' equivalent rent + rent of primary residence) is ~36% of core CPI and moves with a 12–18 month lag to actual rents.
Supercore = core services ex-housing — Powell's preferred gauge of wage-driven inflation.

Gauge	Approx. weight	Volatility
Headline CPI	100%	High
Core CPI	~80%	Medium
Supercore	~25%	Low