IMF Working Papers

Breaking Bad: A Disaggregated Analysis of Inflation Inertia

By Serhan Cevik

September 2, 2022

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Serhan Cevik. Breaking Bad: A Disaggregated Analysis of Inflation Inertia, (USA: International Monetary Fund, 2022) accessed November 23, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

The post-pandemic rise in consumer prices across the world has renewed interest in inflation dynamics after decades of global disinflation. This paper contributes to the literature by providing a granular investigation of inflation persistence at the city level in Lithuania during the period 2000–2021, as well as a comparison of inflation persistence at the country level vis-àvis the eurozone over the same period. Using disaggregate monthly data collected in five major cities, the empirical analysis finds a mixed and ambiguous picture of inflation persistence. While the headline inflation does not appear to exhibit a high degree of persistence, most consumption categories have significant persistence. As a result, shocks may not remain transitory and instead have persistent effects that could spillover across subcomponents depending on the size of the shock.

Publication Details

  • Pages:

    15

  • Volume:

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  • DOI:

    ---

  • Issue:

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  • Series:

    Working Paper No. 2022/167

  • Stock No:

    WPIEA2022167

  • ISBN:

    9798400219689

  • ISSN:

    1018-5941