The controversy over causes of the inflation shock within the US is dominated by concentrate on the fiscal coverage and late tightening, amongst different issues. I believe it’s of curiosity to notice (once more!) that the spike in inflation was not US-specific. Listed below are two graphs I offered in as we speak’s lecture within the ISF.
Determine 1: Yr-on-year headline CPI inflation for US (blue), Euro space HICP (tan), Canada (inexperienced), Japan (pink), Sweden (lilac). Supply: BLS, MEI through FRED, World Financial institution (for Japan).
Inflation rose in lots of international locations, so both there’s a standard international issue, or there’s an incredible coincidence in timing. Power costs I believe account for a number of the acceleration.
What about taking a look at core inflation, which might then be pushed extra by home forces (not utterly as a result of there are imports)? Right here we see acceleration too.
Determine 2: Yr-on-year core CPI inflation for US (blue), Euro space HICP (tan), Canada (inexperienced), Japan (pink), Sweden (lilac). Supply: BLS, MEI through FRED, World Financial institution (for Japan).
Whereas US core outstrips Euro Space in 2021-22, proper now, core CPI and core HICP are operating even (maintaining in thoughts US core CPI outpaced core HICP pre-pandemic).