Money Supply vs Inflation Expectations: What Better Explains Inflation Behavior in Ukraine

What determine inflation, monetary of expectations drivers, question that after covid shock sounds stronger. This article proposes an approach to assess the monetary factors on inflation by identifying the principal component of money aggregates’ behavior and applying Python programming methods to determine the optimal lag between this monetary proxy and inflation. Principal component variable is added by inflation expectations, exchange rate and commodity price indx variables in regression model. Regression analysis demonstrated that inflation expectations are in the most stable statistical relationship with inflation, whereas the principal component of monetary aggregates, exchange rates, and commodity prices have theoretically predictable signs but insufficient statistical significance.