Consider the following with respect to the term Core Inflationbegin{enumerate}item Core Inflation is the inflation rate of a particular basket of commodities.item Core Inflation is the sudden increase in prices of certain items of food grains.item Core inflation is caused by supply shock in certain essential commodities.end{enumerate}

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Consider the following with respect to the term ‘Core Inflation’

A	Only 1
B	Only 2
C	Only 3
D	Only 1 and 2

Explanation:

Detailed explanation-1: -The core inflation rate is the price change of goods and services minus food and energy. The prices of food and energy products are volatile; they change so quickly that including these categories can skew an accurate reading of the true severity of inflation.

Detailed explanation-2: -4. Core Inflation represents price rise in all goods and services but does not include articles from food and energy sector.

Detailed explanation-3: -Core inflation by eliminating the volatile components from the headline helps in identifying the underlying trend in headline inflation and is believed to predict future inflation better. The Indian economy, like many other emerging market economies, has often been subject to some supply shock or the other.

Detailed explanation-4: -Core inflation refers to the non-food non-fuel component of the inflation basket. The respective weights of core and non-core categories in India’s CPI basket are 54.1% and 45.9%.

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