In July 2014, the CPI inflation rate was 0.3 percent while the core CPI inflation rate was 0.1 percent. The difference between these two measurements of inflation indicates
A) prices for food and fuel were increasing more rapidly than prices for other goods.
B) prices for food and fuel were increasing less rapidly than prices for other goods.
C) the underlying inflation rate was higher than the overall inflation rate.
D) a negative underlying inflation rate.

Question

Quizplus · Accepted Answer

The core CPI excludes food and energy prices because they can be very volatile. If the CPI inflation rate is higher than the core CPI inflation rate, it suggests that the prices for food and fuel (which are included in the CPI but excluded from the core CPI) were increasing more rapidly than prices for other goods.

In July 2014, the CPI Inflation Rate Was 0