Inflation returned and reached historic highs in 2022.
As a general rule, in a context of economic crisis, prices tend to fall and families consume less, thus causing a decrease in demand and price reductions. In the opposite scenario, with the economy in expansion, prices increase and families tend to consume more, increasing the demand for goods and services and, consequently, their price.
However, there are other factors to consider when determining nowadays inflation, such as a rise in the production costs as a consequence of material costs. Those additional costs end up as higher prices to the consumers. This is the type of consequence of everything that’s happening due to war in Ukraine and the general rise of cereal, oil and gas prices.
Another factor to take into account is the strong consumer demand. This is precisely what happened during the lockdown, with the prices of essential goods suffering an increase. In addition to increasing pressure on demand, the pandemic has also complicated production chains, causing inflation to increase both through demand and supply.
With the end of the pandemic and the continuation of the war in Ukraine, forecasts for inflation in 2022 are unequivocal: the rise will continue. This trend is worrying for consumers and companies, having already a significant impact on people's daily lives.
As Plato defended, “the most important thing is not life, but the good life.”