You observe that two countries with a fixed exchange rate have current inflation rates that differ from

Question:

You observe that two countries with a fixed have current inflation rates that differ from each other. You check the recent historical data and find that inflation differentials have been present for several months and that they have not remained constant. How would you explain these observations in light of the theory of purchasing power parity?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...