A major inflationary shock may change the inflation regime

We argue that a major inflationary shock may change the inflation regime, which is not the case for a small inflationary shock . The reason is that if a major inflationary shock appears: It becomes important for wage earners to defend their purchasing power, which is not so much the case if inflationary shocks are small; It becomes important for companies to defend their profit margins, which is also not the case if inflationary shocks are small. After the COVID crisis and the war in Ukraine, OECD countries have suffered large-scale inflationary shocks. This will result in a stronger reaction of wages and prices, higher indexation of wages to prices, higher indexation of prices to costs, and altogether a much greater multiplication of the inflationary shock than if it had been small.