Question

Which of the following is excluded from headline inflation to arrive at core inflation?

• A. Energy prices
• B. Gold prices
• C. Automobile prices
• D. Share prices

Hint:

Core inflation is used to measure the long-term trend in inflation by excluding volatile items like energy and food prices.

Answer 1

The Correct Option is A

Step 1: Defining Core Inflation.
Core inflation isolates inflation trends over the long term by removing price fluctuations of food and energy.

Step 2: Evaluating Options.
- (A) Energy prices: This is accurate. Energy prices are omitted from core inflation due to their inherent volatility.
- (B) Gold prices: Gold prices are usually part of headline inflation, not excluded.
- (C) Automobile prices: Automobile prices are incorporated into the inflation calculation.
- (D) Share prices: Share prices are not typically considered in inflation measures as they represent asset values, not consumer goods.

Step 3: Determining the Answer.
Since energy prices are excluded from core inflation calculations, option (A) is the correct choice.