Years have past since the 2022 energy shock, and yet much of the thinking behind commentary on the implications of surging energy prices for inflation and monetary policy remains muddled. Relatedly, there is no consensus about which indicators work best at gauging the risk of inflation becoming persistent. This Focus brings clarity to the debate by setting out what conditions are necessary for energy shocks to have long-lasting effects on inflation and which indicators to watch when evaluating the risks today.
This Focus is an essay that was shortlisted in September for the 2026 Rybczynski Prize run by the Society of Professional Economists. While the essay was written in an individual capacity, it reflects Capital Economics thinking and draws upon CE research.
Subscriber content
Read this in full, free
Start a free trial and use one of your 10 free starter credits to unlock this piece.
