The textbook recommendation is that monetary policy should not react to first-round oil price effects but rather prevent second-round effects from taking hold. The passthrough effects from oil price increases to the different indicators of inflation have been relatively low, with the result that pre-emptive monetary policy decision-making has not been easy.
However, there are indications that secondary inflationary pressures from the oil price increases are starting to occur in South Africa, as is evident in the recent acceleration in domestic producer price inflation.