Economists predict that inflation in non-fuel and non-food items will likely stay low, approximately around 3% in the near future. This projection is attributed to several factors including weak rural demand, subdued housing inflation, and reduced pressure on input costs.
Core Inflation:
- Definition: Core inflation refers to the change in the costs of goods and services excluding volatile items such as fuel and food.
- Recent Data: In January, India’s core inflation hit a low of 3.5%, down from 3.8% in the previous month.
- Trend: Core inflation has consistently remained below 4% for the second consecutive month.
- Impact: This decline in core inflation contributes to an overall decrease in consumer inflation, which stood at 5.1%.
Multiple Choice Questions (MCQ):
- What is the main reason for the projected low inflation in non-fuel and non-food items?
- A) Strong rural demand
- B) High housing inflation
- C) Weak rural demand, soft housing inflation, and lower input cost pressures
- D) High input cost pressures
- What does core inflation represent?
- A) Inflation rate including volatile items
- B) Change in costs of goods and services excluding volatile items
- C) Inflation rate excluding fuel only
- D) Change in costs of goods and services including fuel and food
- What was India’s core inflation rate in January?
- A) 4.2%
- B) 3.5%
- C) 6.1%
- D) 3.8%
- How long has core inflation remained below 4%?
- A) One month
- B) Two consecutive months
- C) Three consecutive months
- D) It has never been below 4%
- What is the impact of declining core inflation on overall consumer inflation?
- A) It increases consumer inflation
- B) It has no impact on consumer inflation
- C) It decreases consumer inflation
- D) It makes consumer inflation volatile