Our approach at the RBA has been, of course, to seek to  6  BIS Review 58/2002  avoid this particular problem. That is what our inflation-targeting system has been doing: by measured, early responses to a significant probability that inflation will rise, we have headed off serious inflation problems before they have become entrenched.
We are still forecasting that underlying measures will be running at about 2 per cent, as we did last time we met. By end 2005, both headline and underlying measures are likely to have moved up to about 2½ per cent. So we still have a shallow saucer-shaped profile for underlying inflation over the next year.