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In the context of the types of Inflation, consider the following statements:
  1. Headline Inflation refers to the change in the value of all goods in the basket including food and fuel.
  2. Core Inflation is more volatile than headline inflation.
Which of the statements given above is/are correct?
  • a)
    1 only
  • b)
    2 only
  • c)
    Both 1 and 2
  • d)
    Neither 1 nor 2 
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
In the context of the types of Inflation, consider the following state...
  • Headline inflation is the total inflation in an economy. The headline inflation figure includes inflation in a basket of goods that includes commodities like food and energy. Hence statement 1 is correct.
  • Core inflation excludes food and fuel items from headline inflation. 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. Hence statement 2 is not correct.
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In the context of the types of Inflation, consider the following statements: Headline Inflation refers to the change in the value of all goods in the basket including food and fuel. Core Inflation is more volatile than headline inflation.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?
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