Consider the following statements and choose the correct codes 1 High core inflation ...........

Economic Affairs Inflation

Consider the following statements and choose the correct codes.

1. High core inflation indicates demand pressures in the economy that can trigger rapid price rise.

2. Given the lack of historical data, the wholesale price index is still the most widely watched measure of prices in India.

Codes:

1 and 2

1 only

2 only

Neither

Both statements are correct.

It refers to changes in the price of a select basket of commodities, which excludes items with volatile prices such a food and fuel.
High core inflation indicates demand pressures in the economy that can trigger rapid price rise. A central bank can then lift interest rates to dampen demand and lower inflation. On the other hand, if core inflation is low, the central bank can cut rates to spur demand.
In absence of a comprehensive retail measure of prices, the wholesale inflation had become the benchmark index for prices for policy-making. The Reserve Bank of India has also often voiced the need for a comprehensive measure to retail prices that is needed for guiding interest rates in the economy.

Hence option 1st is correct.