Unemployment rates hold significant power in influencing inflation dynamics globally.
The study looked at how unemployment and inflation are related over the past 25 years. They found that domestic unemployment can explain 11% of changes in inflation, showing that local job market conditions can affect prices. Global factors like oil prices and trade also play a role in inflation. The study also found that inflation is more sensitive to unemployment in high-inflation or low-unemployment situations, suggesting that companies adjust prices less often in those conditions.