Unpacking Global Inflation

We unpack global inflationary forces by distinguishing imported cost-push pressures from other inflation drivers and examine implications for domestic policy autonomy. Our empirical strategy thus fits a dynamic factor model to constructed goods and services inflation data from 42 countries, with identification exploiting their relative tradability. We find that global inflation comovement is not entirely imported. Imported shocks dominate only at short horizons, especially for goods, whereas a persistent common component remains across both sectors. Although inflation has shifted toward imported pressures, the residual global component suggests that synchronization may still partly reflect policy-relevant domestic margins.