Agricultural produce is a classic example – with droughts, floods or other phenomena sometimes having significant, and even large, impacts. But these effects should be expected to be only temporary – when weather conditions change, prices should revert back to trend.
So there is no need for monetary policy to respond to them, and the various underlying measures help us to abstract from their effects in the short term. When Cyclone Larry devastated the banana crop in early 2006, the effect was to help push the CPI inflation rate up to 4 per cent. That impact has now been reversed.