All countries experience shocks to inflation. The countries with badly structured monetary policy regimes are those where these shocks get embedded into the structure of expectations, where inflation is more persistent, where the economic cost of wringing inflation out of the system is higher. Ila Patnaik had an article in Indian Express about care in thinking about fluctuations of inflation, and the urgent need for an `inflation report'.
Here are examples of some well written inflation reports - UK, Turkey. A good inflation report is one that is intellectually sound: it is rooted in a conceptually correct understanding of the macroeconomy. The people writing the report have to be clear-headed thinkers, grounded in modern macroeconomics, who understand what is actually going on in the country. The authors of the inflation report should have no conflicts of interest other than honestly talking about inflation: there should not be an effort at covering up for mistakes or upholding a broken monetary policy framework. And, it must be written in plain English, not mumbo jumbo, so as to influence the thinking of millions of individuals in the economy.
What shapes our outlook for inflation? The INR/USD has depreciated in recent weeks, which will fuel inflation in coming months. The small rise in WPI Fuel will also worsen inflation in coming months. These factors need to be properly understood by the authors of an inflation report. On the subject of exchange rate pass through, while one can do a little work, even elementary eyeballing of a graph is quite revealing.