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The debate over high inflation often seeks to apportion blame between greedy corporations that raise prices and irresponsible workers who demand unrealistic wages. But, as much as many people enjoy the game of identifying the culprits, the focus should be on solving the problem. With core inflation stubbornly hovering around 5% in the US and Eurozone, and significantly higher at 7.1% in the UK, all of these economies are experiencing unhealthy wage and price dynamics. Companies raising prices has led workers to defend their wage levels and this has put more pressure on companies to increase prices. It is a damaging ratchet, if not a spiral of wages and prices. The causes of the ratchet differ slightly on both sides of the Atlantic.
In the US, a recent paper by Ben Bernanke, former chairman of the Federal Reserve, and Olivier Blanchard, former chief economist of the IMF, convincingly argues that a shock to energy and food prices coupled with high levels Russia Mobile Number List of spending on other goods sparked the inflationary process in 2021. It later spread to other goods and services and to wages, as everyone sought to limit their own pain in a world of high demand, low unemployment and record vacancies. In Europe, the focus was initially even more on energy as wholesale gas prices rose last year. That ensured that most employees experienced significant drops in their real wages. However, their gains in nominal wages helped drive prices up in entire economies, spreading inflation everywhere. This shows that falling real incomes do not necessarily protect against a wage-price ratchet if the initial shock is large enough.
On both sides of the Atlantic, therefore, there is little doubt that the latest levels of wage increases (6 percent in the US, 4.6 percent in the eurozone and 6.5 percent in the UK ) are not consistent with reducing inflation to 2 percent, the objectives of all major central banks. These growth rates must fall if inflation is to be controlled. In recent days, central bankers have spoken out about how they believe the conflict between wages and prices will be resolved. Fed Chairman Jay Powell said wage growth was moderating from “very elevated” levels a year ago. With overall inflation rates falling, "we want to see the process continue gradually," he added, suggesting that time was a great healer. Isabel Schnabel, a member of the executive board of the European Central Bank, said she thought some recovery in wages could be "absorbed, to a large extent, by companies' profit margins, thus breaking the vicious circle between wages and prices." », although he said he warned that if wage increases went too far, it would result in more inflation.
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发表于 2024-3-12 15:22:51