However, from the inflation perspective, this episode itself has two distinct segments. In the first few years, high growth was accompanied  BIS central bankers’ speeches  1  by low inflation, both headline and core. On the eve of the crisis period, both indicators increased significantly, suggesting the emergence of demand-side pressures.
During the brief slowdown, both inflation indicators dropped sharply, but core fell far more than headline, indicating that supply-side pressures were now visible. The resurgence of inflation over the past year is the result of both demand and supply forces, as can be seen from sharp climb in both inflation indicators and the persistent gap between them.