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Breaking Bad: A Disaggregated Analysis of Inflation Inertia
Author:
Mr. Serhan Cevik
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https://orcid.org/0000-0002-2373-2023
Series:
IMF Working Papers
Volume/Issue:
Volume 2022: Issue 167
Language:
English
Publication Date:
02 Sep 2022
DOI:
https://doi.org/10.5089/9798400219689.001
ISBN:
9798400219689
ISSN:
1018-5941
Pages:
15
Keywords:
inflation inertia; consumption category; inflation dynamics; consumer price inflation; inflation expectation; Inflation; Inflation persistence; Consumer price indexes; Consumer prices; Global financial crisis of 2008-2009; Global
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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.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2022: Issue 167