The debate on the causes of the unexpected inflation in the United States has mainly focused on fiscal policy and post-tightening policies. I think it’s worth noting (again!) that the spike in inflation is not unique to the US.Here are the two graphs I showed in today’s lecture International Union of Science.
figure 1: YoY headline CPI inflation for US (blue), Eurozone HICP (tan), Canada (green), Japan (red), Sweden (lavender). Sources: BLS, MEI (via FRED), World Bank (for Japan).
Inflation has risen in many countries, so there are either common global factors or a large coincidence in timing. I think rising energy prices are partly to blame.
What about core inflation, which will be driven more by domestic forces (not entirely because of imports)? Here we also see acceleration.
figure 2: YoY core CPI inflation for US (blue), Eurozone HICP (tan), Canada (green), Japan (red), Sweden (lavender). Sources: BLS, MEI (via FRED), World Bank (for Japan).
While US core surpasses Eurozone in 2021-22, core CPI and core HICP are currently on par (remember US core CPI surpassed pre-pandemic core HICP).
