The return of inflation

While it may now be the case that the coronavirus, which has broken through the protection afforded by the vaccine programme, hasn’t resulted in further lockdowns, the disruption to supply chains continues. Production has been down China, leaving the rest of the world desperately waiting for it to regain full steam. Transportation is still restricted and prices are rising, thus feeding inflation. And all of these negative factors are having on impact on the economy. Higher inflation could mean tighter monetary measures, in the form of interest rate hikes and higher costs for servicing debt. The US economy is no longer booming, but consumer spending proved to be higher than expected in the third quarter. The labour market also appears to be in better shape than it has since the start of the pandemic. Across Europe, the post-pandemic recovery slowed, but consumer spending has nevertheless remained resilient. The figures are worse for production – there are shortages of compon