Core inflation is :

Core inflation is a measure of inflation that excludes volatile categories to analyze underlying price trends. It is specifically defined as headline inflation minus the impact of food and energy (fuel and power) products [2]. While headline inflation reflects the total inflation in an economy, core inflation is considered more stable because it removes temporary price shocks associated with seasonal food items and global energy price fluctuations [3]. In the Indian context, the Reserve Bank of India (RBI) shifted its focus from the Wholesale Price Index (WPI) to the Consumer Price Index (CPI) Combined for anchoring monetary policy [2]. Consequently, core inflation is typically calculated using CPI data by stripping away the food and fuel components to provide a clearer picture of long-term inflation trends [3]. This helps policymakers distinguish between transient price spikes and persistent inflationary pressures [2].

Sources

1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 4: Inflation > PRODUCER PRICE INDEX > p. 69
2. [2] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 4: Inflation > CPI or WPI as the Nominal Anchor for Inflation Targeting > p. 73
3. [3] https://www.rba.gov.au/publications/bulletin/2014/sep/5.html