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Firming up price inflation

Inflation rates in the UK and US are currently at their highest levels in over 30 years. This column uses firm-level data from the Decision Maker Panel to study inflation dynamics in the UK, and in particular since the start of the Covid-19 pandemic. It finds an asymmetric effect of Covid-19 on inflation: positive demand shocks increased prices at the firm level by more than negative demand shocks lowered them. In addition to the rise in price growth, the dispersion and (positive) skewness of prices as well as within-firm price uncertainty have all increased sharply since the beginning of 2021.

Lena Anayi, Nicholas Bloom, Philip Bunn, Paul Mizen, Gregory Thwaites and Ivan Yotzov

26 August 2022

Vox EU

This Blog is published under the Programme on Innovation and Diffusion, and CEP Growth programme.