If you are under 45 and live in America or Europe, the odds are this past year has been your first real experience with inflation. Other than a blip in 2008, inflation has barely topped 3% in the last 30 years.
But now inflation is back; up more than 8% last month, and it may get worse before it gets better. Some of the drivers of price increases today, supply chain disruptions and war in Ukraine, will eventually abate. But there are reasons to believe we aren’t going back to 2% inflation anymore. The economy is different and the new baseline for inflation will be 4% or 5%.