The consumers who drive the global economy have remained surprisingly resilient as the Covid-19 pandemic pushed inflation to 40-year highs, made certain goods scarce and upended the job market. Now a geopolitical storm will test anew their appetite and ability to spend.
Energy and food prices, both key forces behind inflation, may be pushed even higher by the escalating Russia-Ukraine conflict. That will ripple back to households across Europe and the U.S., where shoppers have already faced sticker shock on everything from cars to avocados. In addition, borrowing costs have already begun to rise as central banks pare back emergency pandemic stimulus.
