Consider the following statements regarding headline inflation: 1. Headline inflation is a measure of the total inflation within an economy, including all goods and services such as food and energy prices. 2. Headline inflation is less volatile than core inflation because it excludes highly fluctuating prices of food and fuel. 3. In India, the Consumer Price Index (CPI) is commonly used to measure headline inflation. Which of the above statements is/are correct? |ForumIAS

Q. Consider the following statements regarding headline inflation:
1.Headline inflation is a measure of the total inflation within an economy, including all goods and services such as food and energy prices.
2.Headline inflation is less volatile than core inflation because it excludes highly fluctuating prices of food and fuel.
3.In India, the Consumer Price Index (CPI) is commonly used to measure headline inflation.
Which of the above statements is/are correct?

[A] 1 and 2 only

[B] 2 and 3 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: C

Notes:

Explanation: 1 and 3 only

Statements 1 and 3 are correct: Headline inflation reflects the total inflation, including the prices of food and energy, and is typically measured using the CPI in India.

Statement 2 is incorrect: The headline inflation is more volatile than core inflation precisely because it includes food and fuel prices, which tend to fluctuate widely.

Source: DD News

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