By Transitory, temporary, ephemeral, provisional... These synonyms characterize an event of short duration. But compared to what? A day is a short duration compared to a year. And a year compared to a century. These words have been used many times to describe the period of high inflation we are going through.
A little less than a year ago, on October 16, 2021, ECB President Christine Lagarde declared that "inflation is largely transitory", while the euro zone was experiencing a 3.4% price increase.
It is July 2022 and last week the US Department of Labor announced that consumer price inflation in the US had accelerated last month to a record high last month to a more than 40-year high, driven by high prices at the pump and in food.
U.S. inflation reached 9.1% in June, and 8.6% for the euro zone. Transitory? To be honest, the economists of major central banks certainly did not include the possibility of a Russian invasion of Ukraine, thus making oil and gas supplies scarce and jeopardizing the world's supply of basic food resources.
So it's all a question of scale. Our friends at the helm of central banks could really use some perspective to climb the inflation ladder. See you at the next summit!
