Why inflation looks likely to stay above the pre-pandemic norm

Even as supply-chain snarls ease, wage growth and price expectations are ticking up


news on inflation just keeps coming. At more than 9% year on year across the rich world, it has not been this high since the 1980s—and there have never been so many “inflation surprises”, where the data have come in than economists’ forecasts (see chart). This, in turn, is taking a heavy toll on the economy and . Central banks are raising interest rates and ending bond-buying schemes, crushing equities. in many places is now even lower than it was in the early days of the covid-19 pandemic. “Real-time” indicators of everything from housing activity to manufacturing output suggest that economic growth is slowing sharply.What consumer prices do next is therefore one of the most important questions for the global economy. Many forecasters expect that annual inflation will soon ebb, in part because of last year’s sharp increases in commodity prices falling out of the year-on-year comparison. In its latest economic projections the Federal Reserve, for instance, expects annual inflation in America (as measured by the personal-consumption-expenditures index) to fall from 5.2% at the end of this year to 2.6% by the end of 2023.

  • Source Why inflation looks likely to stay above the pre-pandemic norm
  • you may also like