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The High Stakes of Rising Inflation

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FRANKFURT – Many countries are reporting their highest rates of inflation in decades: 6.2% in the United States, 4.2% in the United Kingdom, 5.2% in Germany, and above 4% in the eurozone. Some insist that it is a temporary phenomenon; others fear that we must brace ourselves for an extended period of significant price increases driven by expansionary monetary policies and rising public debts.

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    Still, both camps agree that at least some of the factors behind the recent inflationary surge will soon subside or disappear. In 2020, prices rose only slightly, and even declined in some cases, setting a low baseline for the year-on-year increase in 2021. Surging prices for heating oil, gas, petrol, and diesel are also generally considered to be temporary. A significant decline in headline inflation can thus be expected in most countries in 2022.

    In the longer........

    © Project Syndicate

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