A spill-out of lurking inflation shouldn’t be a surprise
SummaryInflation near 8% may seem unusual for America but this is the expected if late outcome of a flush of new money created that went chasing assets and inflating various asset-price bubbles.
The US rate of inflation had declined annually for three years till the pan-demic year of 2020. It was just about 1.23% during the year that covid went global. By 2021, it had jumped to 4.7%. This was initially attributed to supply-chain disruptions caused by the pandemic, container ships clogged up at some ports causing delays, and chip shortages holding up automotive production. Some price pressure was also building up on account of demand, part of it pent up under the pandemic and then released in stages as mask mandates came off and revenge shopping began.