Which measure of inflation best reflects underlying trends in the economy?
A) Core inflation
B) Headline inflation
C) Overall inflation
D) Nominal inflation

Question

Quizplus · Accepted Answer

Core inflation is the measure of inflation that excludes volatile items such as food and energy prices, which can fluctuate significantly in short periods. By excluding these items, core inflation provides a more stable and accurate inflation reading that better reflects underlying trends in the economy. Headline inflation, overall inflation, and nominal inflation do not exclude volatile items and can be influenced by external factors, therefore not providing an accurate reflection of long-term trends.

Which Measure of Inflation Best Reflects Underlying Trends in the Economy