The Great Turning of Global Inflation
Global inflation has decreased steadily over the past few decades. It was noted that inflation has remained low since the Great Crisis of 2008. Inflation risk has ceased to be priced by the major central banks，and has been replaced by reflation as a new policy objective. Despite its decade-long dormancy，inflation has also started to gain momentum after previously holding it back.
Deglobalization was accelerated by the 2008 global financial crisis. The “demographic dividend” is approaching a ceiling，and efficient-first globalization is under scrutiny. Combined with a tight labor market，the wage Phillips curve may tilt again. As a result of inflation targeting，central banks have gained the reputation of being inflation fighters，anchoring expected inflation firmly at 2 percent. However，average targeting has taken the first step away from this goal.
From Globalization to Deglobalization
After the Second World War，globalization can be categorized into four stages. The first stage extended from the conclusion of the war until the disintegration of the Bretton Woods system. During this time，global trade was carried out under a fixed exchange rate system and a gold-US dollar exchange standard. The second phase was between the first oil shock and the early 1980s，when globalization stalled. The third stage，from the mid-1980s to the great crisis of 2008，was ‘trade globalization+ factor globalization+ financial globalization’ under the dollar standard and the floating exchange rate. In the fourth phase，globalization reversed post-crisis. Due to their distinct characteristics，the initial and final phases of globalization are in equilibrium，while the concluding stage is imbalanced. The era of peak globalization commenced in 2008，with GDP being attributed to 52.46% of all commodity imports and exports.
Globalization has various impacts on inflation. Firstly，foreign demand is substituting domestic production capacity. Secondly，imported goods have a direct or indirect influence on domestic consumer goods. Given that the trade of intermediate goods is continuously expanding at a faster pace than final goods trade，the value of intermediate goods is constantly rising，which leads to a continual strengthening of indirect effects. Capital account convertibility has led to an increase in cross-border direct investment，the establishment of value chain networks，and the procurement of intermediate goods through global networks，resulting in lower commodity prices. Thirdly，political events such as the fall of the Berlin Wall and the collapse of the Soviet Union contributed to the globalization of the labor market and the increase in competition therein.
Unlike globalization，anti-globalization tends to push inflation upward. Despite the trend towards a reversal of globalization that had already commenced in the aftermath of World War II，the events of 2016，namely Brexit and Trump's election，expedited this process，with COVID-19 further accelerating the phenomenon in 2020. The tariffs implemented by Donald Trump have had a significant and unfavorable impact on supply.
In spite of the political impetus，the diffusion of industrial chain networks may cease for the following reasons: first，import substitution has occurred. The consumption of manufactured goods in China has declined from 9 percent in 2004 to 5 percent in 2018. After more than 30 years of development，labor costs in developing and developed countries have substantially converged. In 2018，the average wage of American workers had decreased to only five times that of their counterparts in China，compared to 35 times in 2000. Considering the gap in labor productivity between the two countries，China does not hold a significant advantage in terms of labor costs.
As labor costs equalize，the scope for reducing prices of conventional trade goods is steadily decreasing. This will also lead to upward pressure with the backflow of the industrial chain. Digital technologies，which have substantially accelerated the digitization of goods and trade in services，have created uncertainty about the price of digital goods and services. Based on McKinsey's data，total trade in services overtook trade in goods in 2017，after accounting for services embedded in trade in goods，digital services，and services provided by parent companies to subsidiaries abroad.
From Baby Boom to Aging
The economic consequences vary significantly among various age categories. Non-working-age people (0-14 and 65+) are net demanders and negative savers，while working-age people (15-64) are net suppliers and positive savers. Changes in age structure have significant economic implications. First，younger populations stimulate economic growth，investment，savings，and have a positive impact on inflation，with an inflation coefficient of 0.75. Second，the working-age population contributes positively to economic growth while reducing inflation (-0.87). Lastly，the elderly population has a negative impact on economic growth and a positive effect on inflation (0.12 points).
Thus，the inflation rate is proportional to the dependency ratio. It is worthwhile to highlight that the impact of declining labor force participation on inflation is comparable to that of the aging process，as the role of the labor force shifts from being a provider to a consumer.