The article examines the transmission mechanism between food and nonfood prices in Lesotho within the vector autoregression framework for the period 2003–2012. The results con? rm that food in? ation in Lesotho is more persistent than nonfood and headline in? ation. This implies that shocks to food in? ation have had a more lasting adverse impact on food prices than is the case for nonfood in? ation. The ? ndings also support the existence of a signi? cant transmission of shocks between food and nonfood prices. As a result, the monetary authorities have to be vigilant when supply shocks hit food, since such shocks could be propagated into nonfood prices and could exert upward pressure on nonfood, headline and core in? ation

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Keywords

Core inflation, food inflation, Lesotho, monetary policy, nonfood inflation