Is this the turning point now? The USA reported 4.2 percent inflation for April. While the country is gradually reopening after Corona, all sorts of industries are reporting supply problems and price increases. Large parts of the industry cannot produce as much as necessary because of the lack of semiconductors and plastics. The transport costs for goods are rising, also because there is a lack of shipping containers. And urgently needed raw materials such as copper, iron ore or steel are expensive, some more expensive than ever. The industry is also suing in Germany. At the end of the pandemic in this country, additional topics are still to come: overcrowded hotels that want to recoup the losses of the past months with high prices, an excessive zest for life of the people after months of starvation, who are willing topaying almost any price for their pleasure. Inflation, that much is certain, is not dead.

Patrick Bernau

Responsible editor for economics and "Money & More" of the Frankfurter Allgemeine Sonntagszeitung.

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    Thomas Klemm

    Editor in the "Money & More" section of the Frankfurter Allgemeine Sonntagszeitung.

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      She was almost forgotten.

      For years, the central banks have endeavored in every crisis with new ideas to drive prices up and to avoid deflation, i.e. falling prices.

      Interest rates went towards zero and even below.

      But inflation did not come back.

      And now?

      Are the current price hikes the harbingers of a time when inflation can be expected again - and perhaps even with significant interest rates?

      Or will inflation go away as quickly as it came?

      One thing is clear: high inflation rates are almost set for the coming months. This is not only due to the adjustment difficulties of the economy after Corona. It's also because current prices are compared to a very cheap past of pandemic times. The oil price, for example, has now reached its pre-Corona level again, but is twice as high as a year ago and is thus contributing to inflation. From July onwards, prices will be compared with those that were depressed by the VAT cut last year. ECB director Isabel Schnabel expects a temporary inflation rate of three percent for Germany, and no one seriously contradicts her. The American Treasury Secretary Janet Yellen, once a Federal Reserve chief herself, has already warned againstthat interest rates cannot stay low forever.

      Will inflation stay that high?

      But the question is: will inflation stay that high?

      Worries are growing among investors.

      Share prices in Europe and America fell sharply at times over the past week, and government bond yields rose.

      But a permanently higher inflation is far from being established.

      Many central bankers believe that the price surge will pass.

      Bundesbank President Weidmann said at the end of March: “A sustained stronger rise in inflation would require noticeably higher wage growth.

      We don't see that at the moment. "

      So far, the majority of Germans are not expecting high inflation, and the unions are also weak - and even if they could push through large wage increases, they first need a new collective bargaining round. The situation is similar elsewhere as in Germany. For example, Klaas Knot, the governor of the Dutch central bank, tells the FAS: “I expect an inflationary surge in the second half of the year. Whether this will only be temporary depends on how wages will react. ”Before Corona, they rose gradually, but that was interrupted by the pandemic. "It is therefore very unlikely that we will see wage demands in the near future that would make the rise in inflation more permanent."