How is inflation inertia characterized in industrialized nations?

Inflation inertia refers to the tendency for inflation rates to exhibit slow and gradual changes over time, particularly in industrialized nations. This phenomenon occurs because expectations about inflation tend to be relatively stable; businesses and consumers often expect inflation to follow past trends rather than changing drastically or suddenly. As a result, even if economic conditions shift, inflation rates do not immediately react. Instead, they change slowly due to the time it takes for expectations to adjust and for changes in monetary policy to take effect.

In modern economies, these expectations can lead to a persistent level of inflation that resists quick alterations, hence the characterization of inflation inertia as involving a slow change in inflation rates year over year. This contrasts with more volatile scenarios, where inflation might change quickly or unpredictably, or where there is a consistent decline in inflation levels or recent shocks that destabilize the economy.