At the same time, of course, higher prices for energy items, including gasoline, heating oil, and natural gas, will be adding to top-line inflation in the near term. As well, these price increases will put upward pressure on the costs of the producers of other items, thereby posing the risk of some impetus to core inflation.
Whether these pressures are, in fact, passed through to core inflation will depend on a host of considerations, including the willingness of producers to absorb those cost increases and experience, at least for a time, lower profit margins. Needless to say, developments in this area will be the subject of intense scrutiny on my part in coming months.