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.
ECONFIX 