Prices are going to rise, probably exponentially, over the course of the next few decades. The reason for that’s simple: everything, more or less, has been artificially cheap. The costs of everything from carbon to fascism to ecological collapse to social fracture haven’t been factored in — ever, from the beginning of the industrial age. But that age is now coming to a sudden, climactic, explosive end. The problem is that, well, we’re standing in the way.

Prices and policy

Consumer prices rose more than economists expected last month, new numbers show, on top of an already high August reading. While a jump in prices was expected as the economy recovered from the pandemic shock, persistently high inflation is complicating plans for both the Fed and the White House, who face pressure to act so that price gains don’t become permanent fixture.

Companies are facing a dire mix of supply-chain challenges, as well as higher costs for energy, raw materials, packaging, and shipping.

While most consumer-goods makers reporting results this week expressed confidence that they’ll be able to limit the long-term hit to profitability, that means the pain passes to consumers, upping the squeeze on pockets as Christmas approaches.

In the US, inflation has accelerated rapidly to the strongest since 2008. Across developed economies, the post-pandemic supply-demand imbalances have pushed the rate above 4% for only the second time in the past two decades.

So what’s happening right now? Consumer prices were up 5 percent from the previous year in May, according to the Bureau of Labor Statistics’ Consumer Price Index, which looks at prices for goods across the economy to get an idea of inflation. It’s a level of increase we haven’t seen since 2008, and one that we’ve only seen a handful of times since the early 1980s. Typically, the Fed targets a 2 percent inflation rate over the long term, though inflation has actually been running below that in recent years.

Prices went up by 0.6 percent in May alone. It’s quite a break from recent history: In the years following the Great Recession, the question many economists have been asking themselves is why inflation was so low.

Americans are paying more for dinner, fuel, and housing, and wage gains, while decent, aren’t keeping up. Hopes that a spike in prices would quickly fade — that pandemic-induced inflation would be “transitory,” to use the economic lingo — are being challenged by rising prices for a wide range of items: Meat rose by nearly 13 percent in the year to September, gasoline was up 42 percent and rent rose by more than 3 percent (double the rate six months ago). 

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