Post-pandemic inflation fears are overblown

 Post-pandemic inflation fears are overblown

Too much in our market system revolves around the short term. That certainly holds true for the debate about inflation. Last week’s data showed US prices rising at their fastest pace in 13 years. That has led everyone from top investors to restaurant and hotel owners, who are now finding that they may have to pay more for previously low wage service staff, to fret about an overheating economy.

But the hand-wringing is premature. These early signs of rising prices are more reflective of a predictable, post-lockdown surge in animal spirits than any longer term trend. Supply chain bottlenecks will soon ease, as they did in 2020 with, say, personal protective equipment. Purchases of cars and vacations will subside as the post-pandemic spending splurge passes. And waiters commanding high salaries today may be replaced by automated systems tomorrow: just notice how many summer travellers already tap their pre-flight…

Read full article…www.ft.com