This is because if these shocks do not flow through to a persistent change in growth of labour costs, inflation should return to a lower rate once the effect of the shock passes. But if supply-side shocks do lead to a persistent shift in labour cost growth, inflation will not return to where it was before.
2 The main downside risks to economic growth in Mexico are external. Most importantly, the United States and other advanced countries face the challenge of maintaining their economic recovery while gradually implementing exit strategies from their unusually expansionary monetary and fiscal policies.