How policymakers should tackle energy price inflation

28 Feb 2022 01:39 PM

EXPERT COMMENT

What’s behind the rise in energy inflation, and how should policymakers respond?

A key driver of the surge in inflation across advanced economies – and the associated ‘cost of living crisis’ – has been a huge jump in energy inflation, which is now running at record highs across Europe.

Let’s start with some basic facts. While services inflation is beginning to increase in several advanced economies, most of the increase in headline inflation over the past year has been driven by consumer goods and energy.

In fact, energy alone has been responsible for over half of the increase in Consumer Price Index (CPI) inflation in advanced economies since the fourth quarter of 2020.

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