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Consider the following statements in regard to Headline inflation :
(1) It provides an accurate picture of the inflation in the country.
(2) It is affected by short term transitory effect on prices of products.
Which of the statements given above is/are correct?
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- l only
- 2 only
- Both l and 2
- Neither l nor 2
Correct Option: B
Headline inflation also called as WPI inflation is a measure of the total inflation within an economy and is affected by areas of the market which may experience sudden inflationary spikes such as food or energy . As a result, headline inflation may not present an accurate picture of the current state of the economy as it doesn't take account of service sector.
