We identify five key structural factors, or “the five Ds,” that will have a significant impact on inflation in the long term: decarbonization, demographics, digitalization, deglobalization, and debt. These factors are likely to have varying effects on inflation across different countries. Demographics will lead to a reduction in the labor supply, increasing pressure on wages. Decarbonization efforts or increasing carbon prices, as well as deglobalization, will result in direct or indirect cost increases. Digitalization will give companies more pricing power. Additionally, high levels of debt could create an inflationary bias, which may threaten the independence of central banks if debt sustainability concerns begin to impact their ability to maintain their monetary policy stance focused on achieving inflation targets.

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