Q. Which of the following statement(s) is/are correct?
1.Headline Inflation includes all items in the consumer price index (CPI).
2.High Food inflation directly influences core inflation.
Select the correct answer using the codes given below:
Answer: A
Notes:
Explanation –
Statement 1 is correct. Headline inflation is the total inflation within an economy and includes all items in the CPI, including volatile components like food and energy prices.
Statement 2 is incorrect. Food inflation directly impacts headline inflation due to its inclusion in the CPI, but it does not directly influence core inflation, which excludes food prices. Core inflation excludes food and fuel prices, so high food inflation does not directly influence core inflation.
Source: The Hindu
