There is an often-repeated joke in economists' circles that goes: Inflation is low, if you exclude food and energy prices. And of course, no one buys food or energy . . .

The above is a critique of the U.S. Federal Reserve's use of core inflation -- which excludes food and energy prices -- as a measure of lasting price changes in the U.S. economy.

Critics charge, "inflation is the sum of all products / services consumers use, not solely a portion." In essence, they argue that the Fed is underestimating inflation, creating a distorted picture of price conditions people face daily.

Still, a new research report by Michael Kiley, a Federal Reserve economist, supports the Fed's continued use of the core inflation metric. In Estimating the common trend rate of inflation for consumer prices and consumer prices excluding food and energy prices, Kiley's research reinforces the theory that total inflation historically contains more temporary changes in prices -- i.e. changes that could disappear -- than core inflation, thus supporting the continued use of core inflation.

In other words, core inflation is used by the Fed because it has been deemed a more-accurate predictor of long-term price changes or 'inflation over time' than total inflation, sometimes also referred to as 'headline inflation.'

Economist David H. Wang said he's by-and-large in agreement with Kiley's conclusions. "Core inflation is more indicative of long-term price changes. The problem occurs when you have periods of large price changes in food and energy, such as today, which pushes total inflation way up. Then the cry occurs that the Fed is not measuring inflation accurately," Wang said.

"But what people have to realize is that those food and energy prices can also drop just as quickly, depressing overall inflation, and that volatility underscores the reason the Fed uses core inflation as a gauge. Core inflation is a more-accurate measure of long-term price pressures in the economy, and we evaluate these long-term pressures to determine if inflation is getting out of hand."

Which begs the obvious question: What if globalization and the new, higher demand it has placed on commodity prices, and by extension on energy prices, represents not a short-term price jump but a long-term price increase?

"History says that will not be the case, that periods of record energy price increases have been followed by price busts," Wang said. "Obviously, the ultimately proof of this will be how energy prices perform following this extraordinary oil bull market."

Economic Analysis: For now, the view from here concurs with economist Wang and argues that core inflation remains a better tool to detect and evaluate long-term price trends than total inflation. The aforementioned assumes a future price decline in oil/energy prices and food prices, something business executives and consumers no doubt hope starts very soon.