However, the pace of increase in prices remains moderate, even in terms of the CPI for all items less food and energy, which is not susceptible to the decline in crude oil prices.
Given these differences in the supply and demand effects, the appropriate monetary policy response will also differ between countries. A common challenge for each country is to determine the magnitude and persistence of the inflationary pressure. In doing so, it will be important to capture the relationship between three prices, namely, the price of goods and services, wages, and commodity prices.