It's tough to completely exclude energy prices from inflation calculations

It’s going to be a big week of inflation data. The Labor Department will release the latest consumer price index on Wednesday, the producer price index on Thursday, and the import price index on Friday.

Whenever inflation reports come out, the numbers that get the most attention are the headline figures, which include food and energy prices.

But let’s set those aside. Because when it comes to energy prices right now, “we don’t know a lot,” said Nicole Cervi, an economist with Wells Fargo.

We don’t know how any of President Trump’s deals with Russia or whoever else are going to affect oil markets. We don’t know when — or if — the wars in Ukraine and the Middle East will end.

Cervi said energy prices are just too volatile. “Similarly, food is in the same category, where you could have a bad harvest in a far-flung area that swings the entire food category,” she said.

If you strip out food and energy prices, you get what’s known as core inflation. It’s running kind of hot, too.

Ryan Sweet, chief global economist with Oxford Economics, that’s partly because artificial intelligence growth is driving up demand and prices for computing and memory chips.

Another factor is tariffs, which are pushing up the prices of electronics and other imported goods, according to Jennifer Lee, senior economist at BMO Capital Markets.

“Clothing is another example, because that’s still being imported,” she added.

But the thing is, you can’t really strip energy prices out of an inflation calculation.

Nicole Cervi at Wells Fargo said apparel prices are going up because of higher transportation costs, which are being pushed up by higher fuel prices. It’s the same story with airfares.

“They’re up more than 20% relative to a year ago. And that is because a lot of their costs comes from jet fuel,” she said.

Cervi said it can take a year for the rising cost of energy to eventually show up in consumer prices.