The world economy’s wage price inflation performs shocking blow perennially. Consumer and wage price cannot be in a prolonged situation like in between Montagues and Capulets. It is overwhelming to tame the current market forces and capital profit.
Here are the brief global outlooks; Consumer price escalates since January in America, Britain, and euro zone. Russia’s invasion to Ukraine worsens the situation. It would inflict oil price to over $96 per barrel. Atlantic financial markets moreover, perform monetary tightening in 2022. Thus, central bankers anticipate credibility test.
Wage raise is ethically pleasing to hear. But this time, it merely becomes corporates’ weapons to raise goods prices. The Economist reports that it is to tame corporate’s greed and at the same time, politically toxic. President Joe Biden celebrates the raise of pay too, but left-wing Democrats blames this as the cause of raising market prices.
Head of European Central Bank, Christine Lagarde is pleased for wage raise. Although, there might be dangers following excessive pay growth. Because, logically firms would push prices to protect profits. Market force is indeed commonly irresistible.
The consumer price inflation skyrocketed to 7.5%. It means that the capital gains the bulk of profit more than labor. This is highly the opposite of what Fed wants to achieve. Fed’s Chairman Jerome Powell, for example, justified that Fed’s attempted to help workers and reduce inequality.
It is agonizing to bring back too high inflation down, when it stays too long in high position. Learning from Japan, interfering wage and price settings is not the solution. The correct action for this situation is to adjust macroeconomic policy.