Economics • Indian EconomyEasy
In the context of the Indian economy, what does the term 'Core Inflation' measure?
A. Inflation rate calculated by including all food and energy commodity prices
B. Inflation rate excluding volatile components like food and energy prices✓ Correct Answer
C. The rate of price increase exclusively for manufactured export products
D. The weighted average of wholesale price increases across heavy industrial inputs
💡 Solution & Explanation
Core inflation isolates underlying price trends by removing volatile components such as food and energy items from the Consumer Price Index basket. Options that include all food and energy items describe headline inflation rather than the core measure. Central banks closely monitor core inflation to gauge persistent inflationary pressures before adjusting monetary policy rates.
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