‘Sellers’ Inflation’ and Monetary Policy Interventions: A Critical Analysis

Abstract

This paper analyses the phenomenon of ‘sellers’ inflation’, that is to say, the increases in consumer prices as a result of firms’ decision to increase their selling prices as much as possible in the aftermath of the war in Ukraine. This analysis focuses also on central banks’ responses to such inflationary pressures, which monetary authorities have been trying to limit with several increases in their policy rates of interest. The paper explains the major shortcomings of this monetary policy strategy and its negative consequences for a number of economic agents. The last section puts forward an alternative economic policy stance, proposing in particular a series of ‘green’ monetary policy interventions to address these inflationary pressures in the general interest for the common good.