⁉️HOW HIGH CAN GLOBAL INFLATION GO? ⨯ [The Economist]

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▶️ After peaking above 10% in late 2022, inflation fell to around 2% by early 2026. The problem seemed solved.
However, a new energy shock due to the conflict in the Middle East has driven oil prices back up from $60 to ~$100 per barrel, increasing inflationary pressure.
▫️A global recession is still unlikely, but rising energy prices are already raising the cost of living and reducing consumer activity. At around $140 per barrel, an economic downturn is possible, but the current price rise is not yet as sharp as in previous crises.
The economy remains stable:
Wages and corporate profits are growing, and markets are anticipating only a slowdown, not a crisis. However, inflation expectations are rising rapidly: with oil at $100, inflation could exceed 4%, and at $140, it could reach 5-6%.
Central banks will find it more difficult to contain inflation:
Companies are raising prices faster, and authorities may limit rate hikes. Data already shows inflation accelerating, especially due to rising fuel prices.
❗️If inflation increases, governments will again be forced to support the population, which will increase budget expenditures. In a populist environment, there's a risk of ineffective measures, and the long-term consequences could be a deterioration in public finances.
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❗ The Economist