It is very difficult to distinguish between lasting inflation and transitory inflation

When inflation rises, it would be very helpful to be able to distinguish between a lasting rise and a transitory rise in inflation. In particular, this would enable central banks to respond to a lasting rise in inflation, and to refrain from responding to a transitory rise in inflation. In practice, however, this distinction is very difficult, if not impossible, to make. If an inflationary shock occurs due to a rise in commodity prices, it can be assumed that this is a transitory rise in inflation. But this transitory rise in inflation turns into a lasting rise: If commodity prices do not fall as much as they have risen (as is the case of natural gas and energy prices in Europe today); Or if the indexation of wages to prices has time to kick in, leading to wage inflation (as is the case in the euro zone today). When an inflationary shock appears, it is therefore very difficult to say whether it will be lasting or transitory.