Markets Are Ignoring the Main Driver of Today’s Inflation
In a rollercoaster economic cycle, inflation is the temporary cost of Covid uncertainty.
The rising cost of goods.
Photographer: Kevin Dietsch/Getty Images North AmericaThe pandemic has prompted the fastest and most volatile economic cycle in modern times. A year ago, financial markets were in a state of panic; today there’s concern over excessive speculation. Fears of depression in 2020 have given way to alarm about hyper-inflation in 2021. Such an extraordinary macroeconomic rollercoaster defies historical comparison.
Consumer price inflation in the Group of 20 reached 3.8% in April, well ahead of central banks’ 2% reference for price stability. In the U.S. it rose 4.2% from a year earlier, the highest in 13 years and up from just 0.3% last year. These gains come on the heels of a collapse in global output a year ago.