And these new experiences may influence their expectations and decisions – even after inflation has fallen again. Thus, the inflation shock could leave “scars”. Such scars would be another factor that could lead to a different inflation setting than we were used to. In this field, we have to expect structural changes anyway.
Think of the transformative forces of climate change, the energy transition, the ageing of societies and the reordering of globalisation. With this in mind, Kenneth Rogoff recently argued that, “the era of perpetual ultralow inflation will not come back anytime soon”. [11] Overall, this could lead to higher trend inflation, but also to a more volatile inflation environment.