Ilustratīvs attēls
Yes.
And there are quite a few signs that it will slow reasonably fast. We are entering a mild recession, which means less demand in the economy and thus less inflationary pressure.
But there are also strong signs from the cost side and that is what I will concentrate on here.
Let’s take a quick look at the history of high inflation for which I have put together Figure 1. The following lessons should be clear by now:
Inflation picked up earlier – around March 2021 – in the USA than in Latvia or the Euro Area where uncomfortably high rates started in July 2021.
The earlier pick-up in inflation in USA is most likely due to the massive fiscal stimulus there. It was big also in Europe but much bigger in the USA.
July 2021 was about seven months before the Russian invasion – high inflation was thus not a result of Russia’s invasion of Ukraine, but it has certainly exacerbated the inflation problem, notably via much higher energy prices.
