| Consider the following Statements: |
| 1 .Core Inflation is essentially demand driven. |
| 2. Core Inflation includes items that face volatile price movement. Which of the following Statement(s) given above is/are correct? |
A) Only 1
B) Only 2
C) Both 1 and 2
D) neither 1 nor 2
Correct Answer: A
Solution :
[a] Manufacturing inflation, also known as 'core inflation', is essentially driven by demand and makes up the non-food basket of the wholesale price index. Core inflation is a measures of inflation that excludes items that face volatile price movement, notably food and energy. It is, therefore, a preferred tool for framing long term policy.
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