Francesca Caselli is an economist in the World Economic Studies Division of the International Monetary Fund (IMF) Research Department. Prachi Mishra is an Advisor in the Research Department at the IMF.
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The economic recovery has fueled a rapid acceleration in inflation this year for advanced and emerging market economies, driven by firming demand, supply shortages, and rapidly rising commodity prices.
We forecast in our latest World Economic Outlook that higher inflation will likely continue in the coming months before returning to pre-pandemic levels by mid-2022, though risks of acceleration do remain.
The good news for policymakers is that long-term inflation expectations are well anchored, but economists still disagree about how
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