Do we really have inflation or do we have temporary price increases caused by a shortage in supply and increasing demand.
What's the difference? Well if its just a transitory supply or demand imbalance it will correct itself. There are some traditional examples of these imbalances where a spike in demand leads increase prices leading to increased production and a price collapse.
We know that when the price of petroleum dropped a lot of marginal production shut down sine it was unprofitable. With the rise in prices it is inevitable that these will come back on-line, as long as they can get workers and equipment.
If they can't we might have a long term imbalance which will mean more permanent price increases and real inflation.
If price increases are related to a permanent change in the economy, they will persist. Sometimes short term increases persist because if they don't reduce demand the producers keep them.
We have seen demand increase and a worker shortage so that is an inflationary scenario. Worker shortages, especially if systemic will lead to increase in the cost of production and an increase in prices.
We have a very complex economy and what happens in energy impacts much of it.
Throw in worker shortages, supply chain issues and loss of overseas manufacturing capacity, we have our current inflation.
All three of those factors like the oil production will generally correct themselves.
Except maybe the worker shortage.
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