Firming up price inflation

Philip Bunn (), Lena Anayi (), Nicholas Bloom, Paul Mizen, Gregory Thwaites and Ivan Yotzov
Additional contact information
Philip Bunn: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH
Lena Anayi: Bank of England, Postal: Bank of England, Threadneedle Street, London, EC2R 8AH

No 993, Bank of England working papers from Bank of England

Abstract: We use data from a large panel survey of UK firms to analyze the economic drivers of price setting since the start of the Covid pandemic. Inflation responded asymmetrically to movements in demand. This helps to explain why inflation did not fall much during the negative initial pandemic demand shock. Energy prices and shortages of labor and materials account for most of the rise during the rebound. Inflation rates across firms have become more dispersed and skewed since the start of the pandemic. We find that average price inflation is positively correlated with the dispersion and skewness of the distribution. Finally, we also introduce a novel measure of subjective inflation uncertainty within firms and show how this has increased during the pandemic, continuing to rise in 2022 even as sales uncertainty dropped back.

Keywords: Inflation; Covid-19; uncertainty (search for similar items in EconPapers)
JEL-codes: C83 D22 D84 E31 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2022-08-19
New Economics Papers: this item is included in nep-ene and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Working Paper: Firming up price inflation (2023)
Working Paper: Firming up price inflation (2023)
Working Paper: Firming up price inflation (2022)
Working Paper: Firming up Price Inflation (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0993

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