Examples of base effect in recent years?

The base effect has significantly influenced inflation rates in recent years. Here are some specific examples:

Energy Prices in the UK:
- In early 2022, fuel prices in the UK were around 150p per litre. By the summer, they had risen sharply to 189.5p per litre for petrol and 197.9p per litre for diesel. This significant increase created a high base for comparison in the following year. As a result, even if prices remained high in 2023, the year-on-year inflation rate for fuel would appear lower due to the high base from the previous year.

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Food and Energy Prices in Croatia:
- In Croatia, the annual inflation rate fell from 13% in November 2022 to 5.4% in December 2023. This decline was partly due to the fading out of base effects related to significant price increases in 2022, particularly in the first half of the year. The negative base effects, which excluded the unusually high month-on-month inflation rates from the previous year, contributed to a slowdown in the annual inflation rate.

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Global Inflation Trends:
- Headline inflation in many countries continued to ease through 2024, driven by further falls in food, energy, and goods price inflation. The base effect played a role here as well, with the comparison to high price levels from the previous year leading to a lower perceived inflation rate in the current year.
US Inflation:
- In the US, the Consumer Price Index (CPI) rose by 3.4% in December 2023 on an annual basis. This figure was influenced by base effects from the previous year when prices had risen significantly. The comparison to these high prices from 2022 made the inflation rate appear lower in 2023.
German Inflation:
- In Germany, the inflation rate was +5.9% in 2023, affected by multiple crises and war impacts. The base effect was evident as the comparison to the previous year's high price increases contributed to a lower inflation rate in 2023.

These examples illustrate how the base effect can distort the measurement of inflation by comparing current prices to unusually high or low prices from the previous year, leading to a perceived change in inflation that may not reflect actual economic conditions.

Examples of base effect in recent years?

The base effect has significantly influenced inflation rates in recent years. Here are some specific examples:

Energy Prices in the UK:
- In early 2022, fuel prices in the UK were around 150p per litre. By the summer, they had risen sharply to 189.5p per litre for petrol and 197.9p per litre for diesel. This significant increase created a high base for comparison in the following year. As a result, even if prices remained high in 2023, the year-on-year inflation rate for fuel would appear lower due to the high base from the previous year.

Preview

Food and Energy Prices in Croatia:
- In Croatia, the annual inflation rate fell from 13% in November 2022 to 5.4% in December 2023. This decline was partly due to the fading out of base effects related to significant price increases in 2022, particularly in the first half of the year. The negative base effects, which excluded the unusually high month-on-month inflation rates from the previous year, contributed to a slowdown in the annual inflation rate.

Preview

Global Inflation Trends:
- Headline inflation in many countries continued to ease through 2024, driven by further falls in food, energy, and goods price inflation. The base effect played a role here as well, with the comparison to high price levels from the previous year leading to a lower perceived inflation rate in the current year.
US Inflation:
- In the US, the Consumer Price Index (CPI) rose by 3.4% in December 2023 on an annual basis. This figure was influenced by base effects from the previous year when prices had risen significantly. The comparison to these high prices from 2022 made the inflation rate appear lower in 2023.
German Inflation:
- In Germany, the inflation rate was +5.9% in 2023, affected by multiple crises and war impacts. The base effect was evident as the comparison to the previous year's high price increases contributed to a lower inflation rate in 2023.