Is high inflation making a comeback?

Photo by Emil Kalibradov on Unsplash

The reasons for the surge

Underlying inflation

UIG: Full data set measure

Source: The New York Fed

The case against a long-term rise in inflation

  • Unionisation levels were higher and workers in the 1970s were in a much stronger position to demand higher wages.
  • Demographic trends in the 1970s and 1980s also saw a huge rise in working-age people, providing a tailwind for demand.
  • Globalisation today is a much bigger factor despite the recent slowdown so there is significantly more international competition holding prices down.
  • The massive technological advances since the 1970s are also inherently deflationary, tending to reduce costs while increasing competition.

New Zealand quiet for now

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GDPLive is a world-first real-time GDP forecaster, which uses big data and AI to form estimates of economic activity in NZ. Go to: www.gdplive.net

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GDPLive

GDPLive

GDPLive is a world-first real-time GDP forecaster, which uses big data and AI to form estimates of economic activity in NZ. Go to: www.gdplive.net

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