The pandemic’s seismic economic disruption has suddenly and radically changed consumers’ spending patterns around the world, leaving official inflation data unmoored from what they are experiencing.
Surges in price growth in many major economies are worrying investors and central bankers. But part of that trend can be blamed on Covid-19 — with important consequences for how we interpret official data.
Inflation is measured using a basket of goods and services which is meant to represent what people typically purchase. Items are given weights proportional to the amount spent on them.
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