ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Core inflation excludes food and fuel items from headline inflation. 3. Since the prices of fuel and food items tend to fluctuate and create ‘noise’ in inflation computation, core inflation is less volatile than headline inflation.

Detailed explanation-2: -Core inflation is the change in the costs of goods and services but does not include those from the food and energy sectors. Food and energy prices are exempt from this calculation because their prices can be too volatile or fluctuate wildly.

Detailed explanation-3: -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-4: -Core inflation is inflation-related to all the commodities, goods, and services in the economy minus the volatile food prices and fuel prices.

Detailed explanation-5: -It is different from core inflation, which excludes food and energy prices while calculating inflation. Food and energy are not included in core inflation because their prices are volatile. It makes headline inflation a more volatile measure than core inflation.