¹ Source: OECD as at August 2021. OECD is the Organisation for Economic Co-operation and Development.
² When consumers, corporations and other parties expect inflation to remain steady, their “anchored” inflation expectations help central banks maintain price stability. If inflation expectations are de-anchored to the downside, the markets think inflation will be lower than the central banks’ target level.
³ In the US, the multi-year growth in broad money supply now exceeds the multi-year growth in real GDP by a wide margin. Historically, this measure of excess liquidity has also coincided with a rise in consumer-price inflation.
⁴ They do this by pegging interest rates at artificially low levels to reduce the costs of servicing sovereign and private debt.
⁵ This also has the added political aim of helping countries ensure the domestic supply of critical products, which increases their strategic self-sufficiency.
⁶ For a deeper discussion of the demographic impact on inflation see, for example, Goodhart, C., Pradhan, M. (2020): “The Great Demographic Reversal” and Juselius, M. and Takáts, E. (2018): “The enduring link between demography and inflation”
⁷ The precise mechanism linking high inequality and low inflation remains unclear, but one driver is that lower-income households tend to consume more. Higher consumer spending tends to push up inflation, all else equal.
⁸ Other factors pushing up gas prices include supply-side constraints and a generally higher demand for energy.

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