Inflation regimes affect the persistence and transmission of sectoral price changes1

Graph 4

A. Sectoral price spillovers are more muted in low-inflation regimes2

%

Share of variance, %

MXJPKRUSCA0153045607590051015202530
Median inflation in (lhs):High-inflation regime Low-inflation regime Spillovers in (rhs):High-inflation regimeLow-inflation regime

B. Sectoral price changes are less persistent in low-inflation regimes3

.

0.40.60.810.40.60.81
US CA JP KR MX Persistence index(low-inflation regime)Persistence index(high-inflation regime)45°