More evidence that the inflation we are experiencing is multifactorial.
The study tried to separate inflation into supply-driven and demand-driven categories.
As you can see in this figure, according to the model supply-driven factors explain about 52% of present headline PCE inflation. Demand-driven factors explain about 29% of present headline inflation.
At the beginning of the pandemic, demand-driven factors plummeted due to the pandemic. This rebounded in March 2021 with the passage of the American Rescue Plan and decelerated in the Summer of 2021 with the rise of the Delta variant.
Supply-driven factors started to increase in April 2021 and remained high ever since as the pandemic affected labor supply and global supply chains. In recent months, the Russian invasion of Ukraine has added to supply disruptions in food and energy.