What is Core Inflation: Inclusions, Causes & Rate?

What Is Core Inflation?

What Are the Causes of Core Inflation in India?

How does Core Inflation Work?

What Are the Impacts of Core Inflation?

What is the Importance of Measuring Core Inflation Rate?

How Is Core Inflation Measured?

FAQs About Core Inflation

What is the key difference between inflation and core inflation?

The major difference between core inflation and inflation is that the former does not account for changes in food and gas prices due to their transitory nature. Therefore the reading of core inflation will always be lower than headline inflation.

What is the formula for calculating core inflation?

You can calculate core inflation using this simple formula: CI= Psg – Pef where CI = Core Inflation; Psg = change in costs of goods and services; Pef = shift in energy and food prices.

Who was the first person to describe core inflation?

Eckstein was the first person who coined the term ‘core inflation’ in 1981. He defined it as the increase in the cost of production factors that come up in the minds of households and businesses in long-term expectations.

Who measures core inflation in India?


2 different agencies in India publish a number of indices for consumer prices which can be used as a measure of inflation. Those organisations are:

  • Ministry of Statistics and Programme Implementation (MOSPI)
  • Ministry of Labour and Employment