Compared to the inflation rate calculated using the Consumer Price Index (CPI), the core inflation rate
A) measures the prices of all products and services, not just those in the CPI basket.
B) includes the volatile categories missing from the CPI basket.
C) excludes the volatile categories from the CPI basket.
D) is always lower.
E) allows quantities to change in the basket of products and services.

Question

Quizplus · Accepted Answer

The core inflation rate excludes the volatile categories (such as food and energy prices) from the CPI basket, while the CPI measures the prices of a basket of goods and services that are typically consumed by households. This makes the core inflation rate less subject to short-term fluctuations and more reflective of underlying inflation trends. Therefore, it is common for the core inflation rate to be lower than the CPI inflation rate.

Compared to the Inflation Rate Calculated Using the Consumer Price