Published 13 July 2021 at 07.21
Economics. Economists warn that inflation in the US in the coming years will be the highest in decades, reports the Wall Street Journal.
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The experts asked by the Wall Street Journal in June have raised their forecasts for both how much inflation will be and how long it will last.
Measured in the core price index used of the US Department of Commerce, economists expect annual inflation of 2.58 percent from 2021 to 2023. In that case, it would be the highest figure since 1993.
– We are in a transition phase precisely now. We are entering a period of higher inflation and interest rates than we have seen in the last 20 years, says Joel Naroff, chief economist at Naroff Economics LLC, to WSJ.
Naroff and the other experts describe a kind of generational change from the lower inflation that has characterized the last two decades. This shift can create problems for households, politicians and investors who have become accustomed to inflation of around 2 percent.
Higher inflation for several years could create major problems for the economy in various ways, states WSJ. Consumers' household budgets are being squeezed. Higher borrowing costs can also affect share values and shrink growth in interest rate-sensitive markets such as the housing market. Higher inflation can also make it harder for companies to plan for long-term investments.