Retail core inflation is calculated excluding which of the following ?

1. Food and beverages
2. Fuel and light
3. Transport and communication
4. Clothing and Education

Select the answer using the code given below :

1 and 2 only

1, 2 and 3 only

1, 2, 3 and 4

3 and 4 only

Answer is Right!

Answer is Wrong!

This question was previously asked in

UPSC CAPF – 2024

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Retail core inflation in India, based on the Consumer Price Index (CPI), is generally calculated by excluding the volatile components of Food and Beverages (Statement 1) and Fuel and Light (Statement 2) from the headline CPI. This exclusion helps to reveal the underlying inflationary pressures in the economy that are less subject to seasonal or temporary supply shocks. Categories like Transport and communication (Statement 3) and Clothing and Education (Statement 4) are typically included in the calculation of core inflation, although price changes in transport can be indirectly affected by fuel costs. Therefore, only 1 and 2 are excluded.

Core inflation provides a measure of underlying inflation trends by removing highly volatile components like food and energy, which helps policymakers assess more persistent inflationary pressures.

In India, CPI-Combined is the main measure for tracking retail inflation. The CPI basket is divided into major groups: Food and Beverages, Pan, tobacco and intoxicants, Clothing and Footwear, Housing, Fuel and light, and Miscellaneous (which includes items like household goods, health, transport, communication, education, recreation, etc.).

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