"Last week, the US got another bad inflation report. The headline annual inflation rate declined from 8.5 percent to 8.3 percent, driven by the plunging cost of gasoline. But core inflation—a measure that excludes volatile food and energy prices—rose from 5.9 percent to 6.3 percent, signaling that the nation’s inflation problems are far from over.
In this article we’ll use charts to explore the many facets of America’s inflation mess. We’ll examine the forces that caused prices to shoot up last year, and look at how those increases have played out in different sectors across the economy." See those charts here.
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"Our sudden, shocking encounter with high inflation has brought to light a disturbing truth: we now have a dysfunctional economy, in which big business has gained too much power over the prices it can charge, while the nation’s households have lost what power they had to protect their incomes from inflation.
It has also revealed the limitations and crudity of the main instrument we’ve used to manage the macro economy for the past 40 years: monetary policy – the manipulation of interest rates by the central bank." Read more here. "Global inflation was generally moderating when the pandemic began, and the downward trend continued into the early months of the crisis. But surging prices since late 2020 have pushed inflation steadily higher. The average global cost of living has risen more in the 18 months since the start of 2021 than it did during the preceding five years combined.
Food and energy are the main drivers of this inflation, as our Chart of the Week shows." Read more on the IMF blog here. |
Maree SpraggonTeacher of IB Economics at the American School of Budapest Archives
February 2024
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