BRIAN KANTOR: Inflation and/or recession: that is the question

When will inflation in the US peak? My answer is about now. And the surveys of inflation and the state of financial markets support this proposition.

Prices have their supply and demand causes, as they have had in our post-Covid, post-Russian invasion world. They also have their intended effects. They have helped repress demand for goods, more than for services, in the developed world and SA. Inflation is properly defined as a continuous increase in the CPI. It takes more than essentially temporary supply-side shocks for inflation to proceed at persistently higher levels. Inflation can only be sustained with continued stimulation of demand.

The clear evidence from recent surveys and bond markets is that economic actors are not naively extrapolating recent inflation into the distant future. They are wisely seeing beyond current inflation to the longer-term demand and supply forces that will act on prices — including the role expected to be played by fiscal and monetary policy.

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