But a tightening of monetary policy in reaction to the rise in headline inflation would lead to a decline in employment and inflation; and because of the long lags between monetary policy actions and changes in economic activity, that decline would occur some time down the road, when inflation would more likely be at or below its underlying trend.
Food prices are not solely determined by domestic supply and demand; they are increasingly influenced by international food prices and therefore by the exchange rate. 6 This is not necessarily negative. Although South Africa is a net food exporter, we do not have a comparative advantage in all food production.