is it possible to summarize this in detail and writen as aintroduction for an essay. im confused on what is being explained here.

Inflation rose markedly in many economies during Introduction 2021, reflecting a mix of supply- and demand-side drivers amid recovery from the COVID-19 shock. With the recovery picking up steam after the Although nominal wage growth hus so far gener- acute COVID-19 shock, inflation in 2021 started ally stayed below inflation, some observers have hitting levels that had not been seen in almost warned that prices and wages could start feeding off 40 years in many economies.' A wide array of factors has underpinned the sharp rises in prices, each other, with wage and price inflation continu- including pandemic-related supply chain disrup ally ratcheting up in a sustained wage-price spiral. tions, commodity price shocks, expansive mone- This chapter unpacks events of the recent past and sheds light on future prospects using a mix of empire tary policy and fiscal support, a surge in pent-up ical and model-based analyses. Historical episodes consumer demand, and changes in consumer preferences for goods versus services (Figure 2.1, in advanced economies exhibiting wage, price, and labor market dynamics similar to those of the current panels 1 and 3). At the same time, economic recovery brought a circumstances-in particular, economies in which real resurgence in demand for labor in many sectors. wages (nominal wages deflated by consumer prices) have been flat or falling-did not tend to show a Labor supply was slow to respond, with some workers hesitant to reengage because of ongoing health con- subsequent wage-price spiral. Model-based analysis cerns and difficulties finding child and family care, suggests that different shocks underpinned wage and among other factors. This demand-supply imbal- price developments through 2020-21: production ance led to tighter labor markets and increased wage capacity shocks predominantly drove wages, while pri- pressures, with average nominal wages (per worker) vate saving and pent-up demand figured prominently rising and the unemployment rate falling beginning for prices. Empirical analysis suggests that while labor in the second half of 2020 across economy groups market conditions remain relevant drivers of wage (Figure 2.1, panels 2 and 5 for advanced economies growth, the importance of inflation expectations has and panels 4 and 7 for emerging market and develop- recently increased. A forward-looking analysis points to ing economies). the critical role of the expectations process in shaping Growth in nominal wages mostly brought the prospects. It demonstrates how front-loaded monetary average level in 2021 back to the pre-pandemic trend, policy tightening, including through its clear commu- although there were differences across economies. nication, can lower the risk that inflation will become Importantly, nominal wage growth in 2021 did not de-anchored from its target. Given that inflationary shocks are originating outside the labor market, falling real wages are helping to slow inflation, and monetary policy is tightening more aggressively, the chances of 1Price inflation is defined with respect to the consumer price persistent wage-price spirals emerging appear limited. index throughout, unless indicated otherwise. ?See Bluedorn and others (2021) for a discussion of how the COVID-19 shock generated a "she-cession," reflecting in part the disproportionate impact of these factors on women's employment. See also ILO (2022) for a more recent assessment of the shock's effects on employment and participation and the differentials The authors of this chapter are Silvia Albrizio, Jorge Alvarez, between men's and women's outcomes. Alexandre Balduino Sollaci, John Bluedorn (lead), Allan Dizioli, 'To achieve the broadest sample coverage possible in the empirical Niels-Jakob Hansen, and Philippe Wingender, with support from analysis, wages (nominal or real) are defined on a per employed Youyou Huang and Evgenia Pugacheva. The chapter benefited worker basis throughout, unless indicated otherwise. For a smaller from comments by Jason Furman and internal seminar participants sample, the chapter includes some discussion highlighting how and reviewers. hourly wages differ