So far, this effect has been relatively mild, and core inflation has not breached 3 percent. In addition, exchange rate pass-through to merchandise prices has been somewhat compensated for by lower telecom prices, reflecting more competition in the sector.
Two warning signals that would argue against continued consumer price stability are a rising trend in producer price changes, which could be partly translated to final goods, and an interruption in convergence of medium-term inflation expectations to the target, as measured by analysts’ surveys. 9 Upside risks to inflation appear to dominate.