Core inflation includes which of the following ?
1. Food prices
2. Energy prices
Select the answer using the codes given below :

Correct option is D

Core inflation is a measure of inflation that excludes items with highly volatile prices, mainly:

• Food, and

• Energy (fuel, power)

The purpose of core inflation is to capture the underlying, persistent trend in prices, which is more relevant for monetary policy decisions.

Food prices are subject to frequent volatility due to:

• Weather conditions (monsoon, droughts)

• Seasonal supply fluctuations

• Agricultural shocks

Therefore, food prices are excluded from core inflation

Energy prices (fuel, electricity, gas) are influenced by:

• Global crude oil prices

• Geopolitical events

• Tax changes

Because of this volatility, energy prices are also excluded from core inflation.