The Energy Origins of the Global Inflation Surge

IMF Working Papers, July 18, 2025

Source details

Authors: Jorge A Alvarez, Thomas Kroen
Date: July 18, 2025
Research focus: Investigates the relationship between energy prices and inflation dynamics in the context of the global inflation surge during the COVID-19 pandemic.

Dataset scope: comprehensive sector-level dataset covering over 30 countries.
Empirical strategy: local projections.
Extension of prior work: moves beyond single-country analyses and aggregate inflation measures by using sectoral detail.

Magnitude of shocks: describes the energy shocks of 2021–2022 as remarkable.
Stability of passthrough: the degree of inflation passthrough of energy shocks appears to be relatively stable over time.
Transmission channels: energy price shocks significantly influence inflation through stable sectoral channels.
Structural determinants: structural characteristics such as energy dependence and price flexibility play critical roles in the passthrough mechanism.
Data importance: highlights the necessity of detailed data on price-setting mechanisms and intersectoral connectivity to understand the energy-inflation passthrough.

Sectoral perspective: underscores the necessity of a sectoral perspective in understanding inflationary pressures.
Data priorities: emphasizes the importance of collecting detailed data on price-setting mechanisms and intersectoral connectivity to better assess and respond to energy-driven inflationary shocks.