Patrick Imam, Tigran Poghosyan
The post-COVID inflation surge was global, but inflation persistence was not. This column argues that the key difference lies in how strongly external shocks fed into domestic inflation dynamics through expectations, wages, and energy-price transmission. Countries with histories of higher inflation and stronger energy pass-through experienced substantially more persistent inflation, while credible policy frameworks helped contain second-round effects. Temporary energy-price smoothing through subsidies also reduced inflation propagation in some cases. In a world with more frequent supply shocks, the policy challenge may shift from preventing inflation shocks altogether to preventing them from becoming structurally embedded in domestic inflation dynamics.
Πηγή: Voxeu