Report
Patrick Artus

What does it take for an inflationary shock (such as rising commodity prices) to not lead to inflation?

From the second half of the 1980s until the COVID crisis, inflationary shocks (increases in energy and other commodit y prices ) did not lead to permanent inflation. Why? Because inflationary shocks were transitory; Because wages reacted little to rising prices; Because companies did not take advantage of the inflationary environment to increase their profit margins. What about today? The rise in commodity prices may be permanent; Wages have begun to react to inflation in some countries and will probably do so in other countries; In the United States, corporate profit margins have increased considerably. So the likelihood of permanent inflation has certainly increased.
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Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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