Inflation in the global economy – a concern?

Very good video from The Economist with a historical and present day look at the inflationary problems in the global economy. The main points are as follows:

  • Inflation least predictable for decades – is it a temporary blip?
  • Most Central Banks aim for 2% inflation per year
  • Inflation over 2% for a short period of time is not such a concern but if it continues for a long period of time it does become troublesome.
  • People wondering why inflation was so low considering the unemployment rate was very low also.
  • Since COVID-19 inflation much higher especially in the US.
  • Is the era of low inflation now over?
  • US – 5.1% inflation – Brazil 9.5%
  • Explains the Base Effect and inflation only transitionary
  • Supply chains problems and increased demand coming out of COVID-19 has increased prices.
  • Demand Pull with Cost Push as the same time.
  • Used car prices have increased by 45% over the last year
  • Food and Fuel are a big part of the expenditures of those in the poor world.
  • Central Banks in emerging markets have to be ‘other toes’ in controlling inflation – Brazil, Mexico and Peru all increased interest rates this year.
  • Inflationary expectations are another concern – self-fulfilling.

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