Real effects of inflation

Why does the Federal Reserve focus on core inflation (that is real inflation less anything volatile like food and energy)? They claim it paints a more realistic picture of the direction of inflation. That model would work well if the groups they point to as volatile were actually volatile and not trending ( 1,5,2,7,1,-2,6,1 is volatile, 1,3,4,2,5,4,7 is trending higher). The fact is the groups they exclude (food and energy) are trending higher over time which is inflationary. The result of this yields a higher cost of living. In the graph below core and headline inflation are not running parallel (which would indicate that measuring a less volatile number would prove fairly accurate over time). Headline is actually increasing at a faster rate (over time) vs. core inflation. Inflation remains in check as long as you exclude the inflationary items.
James Picerno, Seeking Alpha, writes a good piece on the disconnect between headline and core inflation in:

Don't Write Inflation's Obituary, Just Yet

What are the actual effects of focusing on an inflationary gauge that fails to measure the actual, how does this effect my life, measure of inflation? For one, adjustments to Social Security checks are tied to core inflation measures.


The Washington Post reports this morning that
Social Security Checks to Rise 2.3%

Payments to Social Security recipients and most federal retirees will increase 2.3 percent in January. It is the smallest cost-of-living adjustment since 2003, reflecting a lower rate of inflation.