Consider the following statements about Headline inflation It is presently measured in terms of Whol...........

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Consider the following statements about Headline inflation.

It is presently measured in terms of Wholesale Price Index (WPI) in India.
It excludes the prices of food and fuel that constitute the volatile component of inflation.

Which of the above is/are correct?

1 only

2 only

Both 1 and 2

None

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Explanation:

Statement 1: RBI Governor had adopted the new Consumer Price Index (CPI) (combined) as the key measure of inflation in 2014 based on the Urijeet Patel committee recommendation. Earlier, RBI had given more weightage to Wholesale Price Index (WPI) than CPI as the key measure of inflation for all policy purposes.

Statement 2: Headline inflation is a measure of the total inflation within an economy, including commodities such as food and energy prices (e.g., oil and gas). Core inflation calculations excludes food and energy which tend to be much more volatile and prone to inflationary spikes.