This is interesting:
- Canada-CPI-BOC-forecasts.png (52.59 KiB) Viewed 774 times
You will note that the Bank of Canada predicts that inflation will peak in two months from the date of forecast, at a maximum of 2% higher than it currently is, then comes down.
They've done this five times in a row.
And they've been horribly wrong five times in a row.
There is a similar chart for the Fed's predictions.
Probably the same for BofE, (anyone got the data?)
So, either the central banks don't know what's going on and are producing what the politicians want to hear, or they do know what's going on and are lying about it.
Furthermore, the actions the Central banks are taking are not even reducing the rate of increase of inflation (the graph keeps getting steeper), which itself is a very long way from actually reducing inflation.
The rate of inflation is highest in personal essentials; energy, housing and food.
Therefore, people must either borrow more, demand higher wages, or spend less on other personal consumption.
The credit option appears to be tapped out, and I haven't seen a wage rise offer anywhere that even matches inflation as is, still less what it will be soon.
The US personal consumption represents about 68% of GDP, UK 63%, Canada 55%.
Therefore, reduction in personal consumption on non-essentials is inevitable, and will start to substantially affect the governments' tax take. Governments are already being forced to consider reducing taxes on essentials. They either have to cut expenditure or print more money. Cutting expenditure means job cuts and so reduces consumption further, and reduces the tax take further. Printing more money further increases inflation.
It is theoretically possible to reduce inflation by increasing supply, but all three of the essentials are limited by physical capacity, so that's a non-starter. Indeed, the effects of the continuing Ukraine war are that energy and food supply are decreasing.
The Governments are painting themselves into a corner, and are speeding up the brushstrokes.
My conclusion is that inflation will continue until there's the most almighty, and very rapid, recession.
So, where am I wrong/what did I miss?