New Study Reveals Impact of Relative Goods' Prices on Inflation
The article analyzes changes in prices of goods over time to understand inflation. It breaks down price changes into three parts: individual price changes, overall price changes, and pure inflation. The study shows that pure inflation accounts for a small part of overall inflation variability, with most of it coming from overall price changes. The correlation between inflation and economic activity weakens when considering goods' price changes, supporting theories that inflation is influenced by price rigidities in the market.