Core inflation measures price changes for the market basket of the average urban consumer with food and energy costs taken out. This provides a clearer picture of underlying inflation trends, as food and energy prices can be volatile and affected by factors outside of traditional monetary policy.

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Core Inflation

Question 58

Multiple Choice

Core inflation:

A) measures the changes in prices for the entire market basket of the average urban consumer.
B) is inflation measured using the producer price index.
C) measures price changes for the market basket of the average urban consumer with food and energy costs taken out.
D) is inflation measured using the retail price index.

Correct Answer: