Consider the following statements with reference to

Solution

Headline inflation is a measure of the total inflation within an economy, including commodities such as food and energy prices (e.g., oil and gas), which tend to be much more volatile and prone to inflationary spikes. Statement 1 is not correct - On the other hand, "core inflation" (also non-food-manufacturing or underlying inflation) is calculated from a consumer price index minus the volatile food and energy components. Hence, Statement 2 is correct - Headline inflation based on the Consumer Price Index – Combined (CPI-C) has been declining continuously for the last five years. Statement 3 is not correct - Headline CPI inflation declined to 3.4 % in 2018-19 from 3.6 % in 2017-18, 4.5 % in 2016-17, 4.9 % in 2015-16 and 5.9 % in 2014-15.