Consider the following Statements: Core Inflation is essentially demand driven. Core Inflation includes items that face volatile price movement. Which of the above statement(s) is/are correct?
Q. Consider the following Statements: Core Inflation is essentially demand driven. Core Inflation includes items that face volatile price movement. Which of the above statement(s) is/are correct?
Answer: Only 1
Notes: Core inflation refers to a measure of inflation that excludes certain volatile or temporary factors in order to provide a more stable and long-term view of price movements in an economy. It is used to assess underlying inflation trends and to gauge the overall health of an economy. Typically, core inflation excludes the prices of food and energy, as these tend to be highly volatile and can be influenced by factors such as weather conditions or geopolitical events. By excluding these components, economists aim to focus on the underlying inflationary pressures stemming from factors such as wages, production costs, and consumer demand. Manufacturing inflation is basically ‘core inflation’, that is essentially driven by demand and makes up the non‐food basket of the wholesale price index.

 

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