2021–2023 inflation surge
A worldwide surge in inflation began in mid-2021, with many countries seeing their highest inflation rates in decades. It has been attributed to various causes, including COVID-19 pandemic-related economic dislocation, supply chain disruptions, the fiscal and monetary stimuli provided in 2020 and 2021 by governments and central banks around the world in response to the pandemic, and price gouging. Recovery in demand from the COVID-19 recession had by 2020 led to significant supply shortages across many business and consumer economic sectors. The inflation rate in the United States and the eurozone peaked in the second half of 2022 and sharply declined in 2023 and into 2024. Despite its decline, significantly higher price levels across various goods and services relative to pre-pandemic levels persist, which some economists speculate is permanent.[3][4][5][6]
In early 2022, the Russian invasion of Ukraine's effect on global oil prices, natural gas, fertilizer, and food prices further exacerbated the situation.[7] Higher gasoline prices were a major contributor to inflation as oil producers saw record profits. Debate arose over whether inflationary pressures were transitory or persistent, and to what extent price gouging was a factor. All central banks (except for the Bank of Japan which had kept its interest rates steady at –0.1% until 2024[8]) responded by aggressively increasing interest rates.[9][10][11][12]
Inflation perceptions[edit]
An April 2024 Wall Street Journal poll across seven political swing states in the United States found that 74% of respondents thought inflation had worsened over the preceding year, though the inflation rate had declined by nearly half from one year earlier. On net, respondents in every state said the economy had improved in their state over the past two years, though they believed the national economy had worsened.[197] Numerous surveys showed that respondents considered inflation the single most important indicator of economic performance, and that consumers were more likely to perceive inflation as price levels rather than the pace of price increases.[198] The Federal Reserve February 2024 Survey of Consumer Expectations found that consumers had a median expectation of a 3.0% inflation rate in the coming year, and 2.7% over a three-year time horizon.[199]