The measure of inflation that excludes the most volatile items, namely food and fuel, to reveal the steadier, underlying trend in prices.
- Headline inflation covers the whole consumer basket; core inflation strips out food and fuel (sometimes written as "CPI excluding food and fuel").
- The reason: food and fuel prices swing sharply on weather, harvests, and global oil markets, which can mask the true persistent price trend.
- Core inflation is watched by the RBI as a guide to demand-driven and entrenched price pressure, even though it formally targets headline CPI; see concept monetary policy committee.
- When headline inflation is high but core is low, the spike is usually a temporary food or fuel shock rather than broad-based pressure.
- It links to the demand-pull and cost-push distinction; see concept types of inflation and concept inflation.
The definition (inflation excluding food and fuel, showing the underlying trend) and the headline-versus-core distinction are standard inflation facts.
Core inflation (excludes volatile food and fuel) versus headline inflation (the full basket); the RBI's formal target is headline CPI, but it tracks core for the underlying trend.
Inflation excluding volatile food and fuel; shows the underlying, persistent price trend, watched alongside headline CPI.