The return of inflation ?

Find the complete version of my column published in the issue of Les Echos of July 26, 2021.

The post-pandemic period is triggering a strong rebound, and it will take time for supply chains to recover and supply to adjust. As a result, most economists believe that inflation will only be temporary. Moreover, structural reasons for very low inflation persist. In fact, inflation is curbed by globalisation, which keeps the prices of labour, goods and services contained, and the technological revolution, which reduces the bargaining power of low-skilled employees and which, through the dissemination of digital technology and robotisation, allows for productivity gains. It should be noted that since the 1980s, there has been a decorrelation between monetary growth and inflation. And since the 1990s, the Phillips curve has nearly disappeared, as a rise in employment no longer leads to price growth. But what are the reasons that the rise in inflation could be sustainable ? […]

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Directeur Général de la BRED et professeur de macroéconomie financière et de politique monétaire à HEC