Given these differences in the supply and demand effects, the appropriate monetary policy response will also differ between countries. A common challenge for each country is to determine the magnitude and persistence of the inflationary pressure. In doing so, it will be important to capture the relationship between three prices, namely, the price of goods and services, wages, and commodity prices.
The rise in global energy prices will continue to exert downward pressure on the purchasing power of households and international inflation is likely to continue edging upwards in the  BIS Review 81/2005  1  next few months. World inflation is projected to increase to 3,9 per cent in 2005 from 3,7 per cent in 2004.