Q. Consider the following statements regarding Core Inflation and General (Headline) Inflation:

1. Core inflation excludes food and fuel prices due to their high volatility.
2. General or headline inflation in India is measured only by the Wholesale Price Index (WPI).
3. Core inflation is considered a better measure of long-term inflationary trends than headline inflation.
4. The Reserve Bank of India (RBI) bases its monetary policy inflation targeting strictly on core inflation in India.

Which of the above statements is / are correct?
Answer: Only 1 and 3
Notes: Core inflation excludes volatile food and fuel prices, making it a better indicator of long-term inflation trends (statements 1 and 3 are correct). General inflation is not measured only by WPI; CPI is also used. RBI’s inflation targeting is based on headline CPI, not strictly core inflation; hence, statements 2 and 4 are incorrect.