Q. Consider the following statements:
1.Prices of food and fuel is not included in the core inflation.
2.Core inflation is more stable than the headline inflation.
3.Core inflation denotes the total inflation within an economy of a country.
Which of the statements given above are correct?

[A] 1 and 2 only

[B] 2 and 3 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: A
Notes:

Explanation –

Statement 1 and 2 are correct. Core inflation refers to the difference between inflation of all items in CPI and the inflation of food and petroleum. Core inflation is more stable than headline inflation due to the absence of volatile commodities like food and petroleum.

Statement 3 is incorrect. Core inflations denotes the ongoing trends in the inflation of a country used by the state to design economic strategies for the future whereas headline inflation denotes the total inflation within an economy of a country.

Source: The Times of India