Base effects

"Base effects" refers to how economic values from a year ago affect the rate of change in economic data today.

Take inflation, for example. If inflation was high in the same month a year ago, that high value would drop out of the calculation when inflation is recalculated this month.

As a result, high year-ago comparables are favourable, as they make it more likely that inflation will fall when it's reported this month.

Conversely, weak comparables are tougher to beat, , they make it less likely that inflation will fall on a year-over-year basis.

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