Point itch out in principle (5)
I believe the answer is:
ethic
'principle' is the definition.
(I know that ethic is a type of principle)
'point itch out in' is the wordplay.
'point' becomes 'e' (compass point).
'out' indicates an anagram (out can mean wrong or inaccurate).
'in' indicates putting letters inside.
'itch' is an anagram of 'thic'.
'e' inserted inside 'thic' is 'ETHIC'.
(Other definitions for ethic that I've seen before include "Set of moral principles" , "Principles accepted by a social group" , "set of morals" , "Moral code" , "Code of principles" .)