The debate over causes of the inflation surprise in the US is dominated by focus on the fiscal policy and late tightening, among other things. I think it’s of interest to note (again!) that the spike in inflation was not US-specific. Here are two graphs I presented in today’s lecture in the ISF.

(Click on image to enlarge)

Figure 1: Year-on-year headline CPI inflation for US (blue), Euro area HICP (tan), Canada (green), Japan (red), Sweden (lilac). Source: BLS, MEI via FRED, World Bank (for Japan). 

Inflation rose in many countries, so either there’s a common global factor, or there’s a great coincidence in timing. Energy prices I think account for some of the acceleration.

What about looking at core inflation, which would then be driven more by domestic forces (not completely because there are imports)? Here we see acceleration too.

(Click on image to enlarge)

Figure 2: Year-on-year core CPI inflation for US (blue), Euro area HICP (tan), Canada (green), Japan (red), Sweden (lilac). Source: BLS, MEI via FRED, World Bank (for Japan). 

While US core outstrips Euro Area in 2021-22, right now, core CPI and core HICP are running even (keeping in mind US core CPI outpaced core HICP pre-pandemic).

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