Once again, a widely watched inflation data release surprises on the upside. Once again, the underlying drivers of inflation continue to broaden. Once again, it is the most vulnerable segments of the population that are hit hardest.
And once again, those who all year long have been characterising this inflation episode as “transitory” appear hesitant to revisit their convictions despite consistently contradictory data.
At one level, this hesitancy should not come as a huge surprise given the usual behavioural traps: in this case, they include inappropriate framing, confirmation biases, narrative inertia, and resistance to a loss of face. Yet, its persistence in the face of repeatedly contradictory data seriously increases the risk of otherwise-avoidable economic, financial, institutional and social damage.