The effects of rising import prices on inflation diminish over the next few years, and
domestic inflationary pressures gradually pick up as spare capacity is absorbed and wage growth recovers.
The net effect of higher import prices and continued subdued
domestic inflationary pressures is likely to be a moderate rise in inflation during the period in which import prices are adjusting.
This has come about because
domestic inflationary pressures have remained firm, while the disinflationary effects of the large exchange rate appreciation in 2002 and 2003 have continued to wane.
Domestic inflationary pressures, associated with higher wages and incomes, will lead to higher inflation for non-tradable goods and services but, at the same time, the gradual pass through of the initial exchange rate appreciation will lead to lower inflation for tradable goods and services (whose prices in foreign currency terms depend to a significant extent on global considerations).
In addition,
domestic inflationary pressures are expected to kick in as inventories are absorbed and wage growth rebounds in the near - to medium - term.
Not exact matches
«Such a disruption could... drive further sterling depreciation, potentially triggering a build - up in
inflationary pressures and lead to a downward adjustment in
domestic demand,» the BoE said.
Overall, inflation expectations are marginally higher than in the winter survey: higher commodity prices and expected
inflationary pressures in the United States are viewed as contributing to
domestic inflation over the next two years.
The Australian economy to date has stayed robust, and the main
domestic challenges are those of strong demand, tight capacity and
inflationary pressures.
Indicators of producer price inflation by stage of production confirmed the sharp contrast between
domestic and external sources of
inflationary pressure.
The large nominal exchange rate appreciation also helped to contain
inflationary pressures in an environment of strong growth in
domestic demand and a decline in the unemployment rate to relatively low levels.
Nonetheless, given the tentative signs of easing in
domestic demand
pressures, the Board judged that there was a case to hold the cash rate steady for the time being, to allow further time to assess the strength of
inflationary pressures.
Rather than react to fluctuating
inflationary pressures, they're looking at the overall
domestic and global economy and making common sense decisions.
Once
domestic fiscal resources exceed foreseeable budget needs there is a twofold rationale to create a long - term savings fund: the first is to better accumulate and manage assets and the second is to invest overseas to avert «Dutch Disease» -
inflationary and currency
pressures that might stifle economic activity.
Rising rents, qualitative easing (the printing of money), federal spending outpacing revenue, and a national debt equal to roughly 10 percent of Gross
Domestic Product are all raising
inflationary pressures.