What are the arguments for transitory or permanent inflation?
For some economists (and central banks), the current surge in inflation in the United States and the euro zone is transitory, and inflation will have returned to a markedly lower level by the end of 2022; for other economists, on the contrary, inflation will be persistently high. What are the arguments in either direction? In favour of the theory of transitory inflation: prices of commodities, semiconductors and transport are falling due to the increase in the supply of these goods and services; nominal wages are weakly indexed to prices; In favour of the theory of permanent inflation: the COVID crisis has increased employees' bargaining power in the labour market; the energy transition will drive up the prices of energy and many metals; given the rise in expected inflation, raising selling prices has become normal again for companies.