Consider the following statements regarding ldquo core inflation rdquo 1 Core inflation is an indica...........

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Consider the following statements regarding “core inflation”:

1. Core inflation is an indicator of long-term trend in the inflation.

2. While calculating core inflation transitory price changes are excluded.

Which of the above statement/s is/are correct?

1 only

2 only

Both

None

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Explanation:

Core inflation is the non-food manufacturing inflation. Core inflation shows price rise in all goods and services excluding energy and food articles.
In India, it was first time used in the financial year 2000–01. This was criticized by experts on account of excluding food articles and energy out of the inflation and feeling satisfied on the inflation front. Basically, in the western economies, food and energy are not the problems for the masses, while in India these two segments play the most vital role for them.