Retail core inflation is calculated excluding which of the following? 1. Food and beverages 2. Fuel and light 3. Transport and communication 4. Clothing and Education Select the answer using the code given below:

Retail core inflation is a measure of inflation that excludes volatile components to capture the underlying long-term trend in price levels. In India, the Consumer Price Index (CPI) is used to measure retail inflation [3]. Core inflation is specifically calculated by excluding the 'Food and Beverages' and 'Fuel and Light' groups from the headline CPI [1]. These categories are excluded because their prices are subject to frequent and temporary supply-side shocks, such as weather conditions affecting crop yields or global geopolitical tensions impacting oil prices [1][3]. Other components like 'Transport and Communication', 'Education', 'Health', and 'Clothing' are considered part of the core inflation basket as they exhibit more stable price behavior. Therefore, only items 1 and 2 are excluded from the retail core inflation calculation.

Sources

1. [3] https://jkdat.jk.gov.in/pdf/books/Monthly%20Economic%20Report.pdf
2. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 4: Inflation > PRODUCER PRICE INDEX > p. 69