Graph of Risks to the Inflation Projection (GRIP)
4th Situation Report 2013
The model simulation results captured in the GRIP together represent a slightly anti-inflationary balance of risks to the forecast published in Inflation Report II/2013, due mainly to the deviation of inflation from the forecast up to now. The other variables have a broadly neutral impact on the overall balance of risks, with a sharper-than-forecasted decline in economic activity in 2013 Q1 being offset by a less anti-inflationary structure of demand, including a revision of the national accounts for 2012.
Outside the GRIP simulation there is a slight downside risk to the short-term inflation outlook, and minor risks exist in the fiscal area, linked chiefly with the impacts of this year’s floods and the current political uncertainty. However, these factors do not shift the overall balance of risks very much. The Monetary and Statistics Department therefore assesses the overall balance of risks as being slightly anti-inflationary, i.e. tilted to a need for slightly easier monetary conditions compared to the forecast published in Inflation Report II/2013.
