This might, on the other hand, also reduce the equilibrium level of the real interest rate. Poor productivity growth also prevents inflation from falling adequately when growth is slowing, by keeping unit labour costs excessively high.
4 The rise and fall of gasoline prices played a major role in the dynamics of inflation over the summer, contributing 0.4 percentage point to month-over-month personal consumption expenditures (PCE) inflation in June and subtracting 0.2 percentage point in July.