20 Since exchange rate movements have been significant in recent years, our framework was augmented to include the impact of ERPT. The impact of ERPT was derived using a bottom-up approach for each measure. 21 Most prices are not very flexible in the short run.
An increase in the price of one very important good, such as gasoline, will typically not be immediately offset by small declines in all other prices, and hence, the overall price level will rise. This will show up as an increase in the rate of change of the price level: measured inflation.