The Rise and Retreat of US Inflation: An Update

Laurence M. Ball (), Daniel Leigh () and Prachi Mishra ()
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Laurence M. Ball: Johns Hopkins University
Daniel Leigh: International Monetary Fund
Prachi Mishra: Ashoka University

No 169, Working Papers from Ashoka University, Department of Economics

Abstract: Why did US inflation rise over 2021-22 and why has it retreated since then? Ball, Leigh, and Mishra (2022), writing near the inflation peak, explained the rise with a framework in which inflation depends on three factors: long-term expectations; the tightness of the labor market as measured by the vacancy-to-unemployment (V/U) ratio; and large changes in relative prices in particular industries such as energy and autos. This paper finds that the same framework explains the retreat in inflation since our earlier work.

Pages: 55
Date: 2026-09-18
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