The Rise and Retreat of US Inflation: An Update
May 16, 2025
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Summary
Why did US inflation rise over 2021-22 and why has it retreated since then? Ball, Leigh, and Mishra (2022), writing near the inflation peak, explained the rise with a framework in which inflation depends on three factors: long-term expectations; the tightness of the labor market as measured by the vacancy-to-unemployment (V/U) ratio; and large changes in relative prices in particular industries such as energy and autos. This paper finds that the same framework explains the retreat in inflation since our earlier work.
Subject: Energy pricing, Expenditure, Inflation, Labor, Labor markets, Prices
Keywords: copyright page, Core inflation, core inflation gap, Energy pricing, Global, headline inflation shock, Inflation, inflation peak, Inflation shocks, Labor markets, Phillips curve, US inflation
Pages:
37
Volume:
2025
DOI:
Issue:
094
Series:
Working Paper No. 2025/094
Stock No:
WPIEA2025094
ISBN:
9798229007719
ISSN:
1018-5941
