In this paper we model monthly UK inflation and find that there is some small but significant autocorrelation …, particularly at 12 months. We find that this autocorrelation in monthly inflation leads to significant persistence in the headline … annual inflation figure. A one-off shock to monthly inflation will have an effect on the headline figure equal to 10% of the …

This chapter examines the concept of inflation persistence in macroeconomic theory. It begins by defining persistence … persistence from the literature on imperfect information models, learning models, and so-called “trend inflation models …