Consider the following statements regarding Inflation 1 In NSO rsquo s Consumer Price Index the petr...........

Economic Affairs Inflation

Consider the following statements regarding Inflation:

1. In NSO’s Consumer Price Index, the petrol and diesel are counted under ‘fuel and light’ and hence they are reflected in the core inflation and not under headline inflation.

2. Housing prices are counted in the urban area’s CPI calculation, but not in rural area.

3. At present, the RBI Act requires the central bank to control coreinflation and keep it between 2% to 6% CPI (All India Combined).

How many of the above given statements is/ are correct?

Only one

Only two

Only three

All four

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Explanation:

Inflation is a complex economic phenomenon, and various factors contribute to its measurement. Let's assess the statements given:
Incorrect. In the National Statistical Office’s (NSO) Consumer Price Index (CPI), petrol and diesel are indeed counted under 'fuel and light'. However, they are considered part of headline inflation, not core inflation. Core inflation excludes volatile items like food and energy (which includes fuel and light).
Correct. Housing prices are indeed included in the urban component of CPI calculations, reflecting the cost of living in urban areas, but they are not considered in the rural CPI because of the lesser relevance of rented accommodation expenses in rural economies.
Incorrect. The RBI Act mandates the Reserve Bank of India to target headline inflation, not core inflation. The RBI's target for CPI inflation is 4%, with a tolerance band of 2% to 6%, and this encompasses all components of the CPI, not just the core inflation.
Since only the second statement is correct, the answer to the question is:1 (Only one).