What is the main reason for the decline in core inflation across most countries in 2024?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. Drop in international commodity prices.
The primary driver behind the global decline in core inflation during 2024 was the significant drop in international commodity prices, including crude oil, natural gas, metals, and agricultural raw materials.
Although "core" inflation excludes direct food and energy costs, lower commodity prices reduce the input and operational costs (like manufacturing and logistics) for almost all goods and services. This "imported disinflation" effect, combined with the cumulative impact of high interest rates from central banks, helped ease price pressures across the globe, allowing inflation to retreat from its post-pandemic peaks.