10 Unfortunately, the planned switch to the 3–5 per cent inflation target range was put off when the rand depreciated in 2001 and never reinstated. South Africa was left with a wide target range. In hindsight, this might have been useful. After all, it is not possible or even always desirable to steer inflation at one exact speed all the time.
But, when we begin to consider the impact of structural food price shocks, such as the ones we appear to be experiencing in the Indian context, the policy implications become complex. Do we treat these developments as a change in relative prices, with consumers substituting away from the increasingly expensive food items, with no particular macroeconomic significance and, therefore, no implications for policy?