{"id":21415,"date":"2024-03-11T07:01:18","date_gmt":"2024-03-11T01:31:18","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=21415"},"modified":"2025-04-06T12:04:45","modified_gmt":"2025-04-06T06:34:45","slug":"core-inflation","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/core-inflation\/","title":{"rendered":"Core Inflation"},"content":{"rendered":"<h2>About Core Inflation<\/h2>\n<ul>\n<li>It is the\u00a0change in the costs of goods and services excluding the price variations in\u00a0seasonal elements, such as those\u00a0related to\u00a0food and energy.<\/li>\n<li>Food and energy prices are exempt from this calculation\u00a0because their prices can be too volatile or fluctuate wildly.<\/li>\n<li>Core inflation\u00a0represents the long-term trend in the price level.<\/li>\n<li>Why is it important?\n<ul>\n<li>It is used to\u00a0determine the impact of rising prices on consumer income.<\/li>\n<li>To deal with such situations, many central banks use measures of core inflation that are designed\u00a0to filter transitory price movements.<\/li>\n<li>If the increase in the price index is\u00a0due to temporary shocks that could soon reverse themselves, it\u00a0may not require any monetary policy\u00a0action.<\/li>\n<li>On the other hand, prices of other commodities do not fluctuate as regularly as those of food and fuel: as such,\u00a0increase in their prices could be taken relatively to be much\u00a0more of a permanent nature.<\/li>\n<li>It follows\u00a0logically for Central Banks to target only core inflation, as it\u00a0reflects the demand-side pressure\u00a0in the economy.\u00a0<\/li>\n<li>Core inflation, by eliminating the volatile components from the headline\u00a0helps in identifying the underlying trend in headline inflation and is believed to\u00a0predict future inflation better.<\/li>\n<li>It is a convenient guide to help the central bank\u00a0achieve its objective of controlling total inflation.<\/li>\n<li>Whenever core inflation rises,\u00a0Central Banks increase their key policy rates to suck excess liquidity from the market, and vice versa. It is, therefore, a preferred tool for framing long-term policy.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2>What is Headline Inflation?<\/h2>\n<ul>\n<li>Headline inflation is the\u00a0total inflation in an economy.<\/li>\n<li>It is the raw inflation figure\u00a0reported through the Consumer Price Index (CPI).<\/li>\n<li>The headline inflation figure includes inflation in a basket of goods that\u00a0includes commodities like food and energy.<\/li>\n<li>It is different from core inflation, which excludes food and energy prices while calculating inflation.<\/li>\n<\/ul>\n<hr \/>\n<h3>Q1) What is Deflation?<\/h3>\n<p>Deflation is a general decline in prices for goods and services, typically associated with a contraction in the supply of money and credit in the economy. During deflation, the purchasing power of currency rises over time.<\/p>\n<p><strong>Source:<\/strong> <a href=\"https:\/\/economictimes.indiatimes.com\/news\/economy\/indicators\/core-inflation-to-stay-around-3-till-q1-fy25-economists\/articleshow\/108185502.cms?from=mdr\" target=\"_blank\" rel=\"nofollow noopener\"><u>Core inflation to stay around 3% till Q1 FY25: Economists\u00a0<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Core Inflation is the change in the costs of goods and services excluding the price variations in seasonal elements, such as those related to food and energy.<\/p>\n","protected":false},"author":5,"featured_media":21416,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-21415","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/21415","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=21415"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/21415\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/21416"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=21415"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=21415"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=21415"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}