Q. Many a times we read in the newspapers about a term “Core inflation“. The Core inflation is different from the general inflation because of the following?
Answer: Core Inflation is the inflation rate of a particular basket of commodities
Notes: Core inflation measures the long-term trend in prices by excluding volatile items like food and energy. It focuses on a specific basket of goods, providing a clearer view of underlying inflation trends. This helps policymakers make informed decisions, as core inflation is less affected by temporary price shocks. The concept is crucial for central banks in setting monetary policy.