Remember that inflation is a response by companies to a fall in their profit margins

Inflation can first result from a rise in commodity prices. But this is not really inflation: it is an upward adjustment in relative commodity prices. For there to be true inflation, the prices of goods and services produced domestically must rise. And this increase is a response by companies to a fall in their profit margins, with the objective of restoring them. To ascertain whether there will be “true” lasting inflation in OECD countries, we must therefore look at corporate profit margins. We should expect lasting inflation if they are abnormally low, but not if they are normal or high. At present, we see that profit margins are: Slightly lower than before COVID but rising in the euro zone, the United Kingdom and Japan; Much higher than before COVID in the United States. I nflation in the United States is therefore not a result of efforts by companies to correct excessively low profit margins.