In other words, one cannot forecast macro-level changes simply by adding up micro-level changes. In the end, to forecast price developments at the macro level, analyses from a macro perspective are necessary. Specifically, it is essential to examine the output gap, that is, how much demand there is relative to the supply capacity of the economy as a whole.
Liu, Y. and N. Westelius (2016), ‘The Impact of Demographics on Productivity and Inflation in Japan’, IMF Working Paper, No 16/237. McDermott, J. (2017), ‘Looking at the Stars’, speech delivered to HiFX in Auckland on 26 July 2017. McDonald, C. (2017), ‘Does past inflation predict the future?’, Reserve Bank of New Zealand Analytical Note, AN2017/04.