Sam Fleming, Valentina Romei, Olaf Storbeck, and Ilya Gridneff of the Financial Times report that a post-Covid inflation rise will leave a toxic legacy for governments across rich economies. They write:
Lingering consumer anger over high prices is hurting governments in advanced economies even though inflation is subsiding to normal levels, as a once-in-a-generation surge in costs leaves a toxic legacy for incumbent politicians.
Discontent over the economy was a key motivator for Republican voters in last week’s US election, exit polling suggested — contributing to vice-president Kamala Harris’s defeat at the hands of Donald Trump.
Incumbents in countries including the UK and Japan have also suffered in elections this year, partly because of anger at high living costs. […]
Average price levels across the OECD were approximately 30 per cent higher in September 2024 than they were in December 2019, before Covid’s emergence triggered a series of shocks and policy responses which, when combined with Russia’s full-scale invasion of Ukraine, fuelled the inflationary surge.
“[Consumers] look at how much they spend on their utility bill or their weekly food shop and conclude that these costs aren’t going down, so the cost of living crisis is still going on,” said Paul Dales, economist at consultancy Capital Economics. […]
Workers attributed recent gains in income to their own hard work, while higher prices were down to external forces beyond their influence.
“Many people appear to perceive a sudden rise in cost of living as unfair and fear a loss of control over their lives,” said Dullien.
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