 Was the Post-Lockdown Inflation Surge Mainly Supply Driven?Bill Dupor and Marie Hogan No 2025-007, Working Papers from Federal Reserve Bank of St. Louis Abstract: By December 2022, the price level of personal consumption expenditures on core goods and services had risen more than 10 percent over the preceding two years. This paper studies consumption price and quantity changes at the disaggregate level using a generalization of Shapiro’s (2024) inflation decomposition method. Categories with inflation and consumption growth innovations that positively co-move are labeled as experiencing current demand-pull inflation. Negative co-movement in the two innovations indicates current supply-push inflation. Category inflation is then decomposed into supply and demand (both current and the expected effect of past shocks) as well as trend. We benchmark the technique using a classic supply disruption, the 1973 oil embargo. 75 percent of non-trend inflation immediately following the embargo was supply-push. In contrast, 33 percent of non-trend inflation was supply-push following the pandemic lockdown. Restricting attention to categories with market-based prices, this falls to 26 percent. Keywords: inflation; supply; demand (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:99767 Ordering information: This working paper can be ordered from DOI: 10.20955/wp.2025.007 Access Statistics for this paper More papers in Working Papers from Federal Reserve Bank of St. Louis Contact information at EDIRC. |
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