Question

Which one of the following is related with the core inflation of an economy?

• A. Inflation which excludes certain items that face volatile price movements
• B. Inflation which includes certain items that face volatile price movements
• C. Inflation due to rise in the production of non-agricultural products
• D. Both 'a' and 'b'

Answer 1

The correct option is A Inflation which excludes certain items that face volatile price movements

Core inflation excludes inflation in commodities which experience sharp transition in prices and are hence volatile in their price movements. These include food and energy which are excluded in the calculation of core inflation.