As a result, in the first quarter of 2017, oilsensitive items were still holding back core inflation. This illustrates that core inflation does not always give us a clear reading of underlying inflation dynamics. Global factors therefore do appear to be weighing on the path of inflation today.
But our analysis suggests that the drivers of low oil prices at present are mainly supply factors, which a central bank can typically look through.1 And even if supply factors affect the path of inflation for some time, with inflation expectations secure, they should not ultimately affect the inflation trend.