Owing mainly to base effects stemming from the past behaviour of energy prices, headline annual inflation rates are projected to decline further in the coming months, possibly temporarily reaching negative levels around mid-year. Thereafter, annual inflation is expected to increase again, also owing to base effects stemming from past energy price developments.
That makes deciphering the right signals from economic data and separating the grain from the chaff, that is distinguishing the trends and cycles from spurious noise, much more complex. The lesson from all this is that in collecting, analysing and interpreting data for economic analysis, we should be mindful of its inherent and unavoidable imperfections.