THE TWO-REGIME VIEW OF INFLATION

The global surge of inflation that started in 2021 took most observers by surprise. It threatened to thrust the world back into an inflationary environment that we thought we had finally escaped decades ago. This study – prepared by BIS staff – documents the stylized facts describing the two regimes – low and high inflation – and the transitions between them based on disaggregated price dynamics and the joint behaviour of wages and prices.