Inflation Is Now Global, But the Traps Are Local
Why it’s tough to take the inflation fight to where it truly matters: The big powers like the U.S., China and Europe are hemmed in by domestic policies they can’t exit. Expect prices to keep rising.
Don’t expect a big, global inflation-fighting accord.
Photographer: Graeme Jennings-Pool/Getty
When it comes to inflation accelerating around the world, don't count on a swift response from the two most important economies. The U.S. and China are trapped by their own policy choices and domestic priorities. Neither has much appetite for an assault on price increases. Germany's calls for a clampdown are too late.
For anyone still wedded to the idea that elevated inflation is a short-term phenomenon, a welcome respite from years of too-low readings, the latest numbers are sobering. Producer prices in China jumped the most in 26 years and consumer inflation picked up, Beijing said Wednesday. Hours later, the U.S. Department of Labor reported that consumer prices climbed at the fastest rate since 1990, outpacing economists’ expectations. Germany’s council of economic advisers demanded that the European Central Bank explain how it will rein in monetary policy. Inflation in the continent's pivotal nation will be above the ECB's target this year and next, the group projected.