Inflation inertia is best described as what?

Inflation inertia refers to the tendency of inflation to continue at a stable rate over time, showing little variation. This concept suggests that once inflation is established at a certain level, it can persist due to factors such as long-term contracts, expectations of future inflation, and adaptive behaviors of businesses and consumers. As a result, even when economic conditions change, inflation can remain relatively constant, leading to a steady rate of inflation. This stability can be influenced by monetary policy as well.

The other options do not accurately capture the essence of inflation inertia. Unpredictable inflation, quick increases in price levels, and deflationary pressures focus on volatility or decreases in prices, which are contrary to the idea of inflation inertia being characterized by stability and predictability.