Inflation fears escalate as GDP returns to its pre-pandemic level

Barry Naisbitt (), Janine Boshoff (), Dawn Nicole Holland (), Ian Hurst (), Iana Liadze (), Cyrille Lenoel (), Corrado Macchiarelli, Xuxin Mao, Patricia Sánchez Juanino, Craig Thamotheram () and Kemar Whyte ()

National Institute Global Economic Outlook, 2021, issue 3, 5-22

Abstract: The American Rescue Plan is starting to be reflected in rapid GDP growth, with US GDP back to its pre-pandemic level at mid-year. At the same time, a combination of factors on both the demand and the supply sides has raised annual US CPI inflation to 5.3 per cent in June, the highest rate for over 10 years. Increases in inflation are also being seen in other advanced economies, reflecting the drop in inflation last year (so-called base effects), rises in commodity prices, and reports of shortages of some goods as global supply chains have become strained. As a consequence, a key issue in some economies concerns whether the increase will prove to be only temporary and what effects the increase in inflation will have on the economy and economic policy.

Date: 2021
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