Rising costs, the next difficult opponent

Rising costs, the next difficult opponent

The issue of rising costs was like a pandemic in the beginning. Many believed that it would last three, five, or even six months and that our lives would return to normal afterward. In fact, many believed that it was a temporary phenomenon that would last a few months as it was a consequence of malfunctions caused by the pandemic. Unfortunately, this is not the case.

All forecasts show that the high costs of energy, raw materials and basic goods will last a long time. Besides, history has shown that when a price rises it rarely drops again.

It does not require much imagination to understand the social and political implications of this development. All you have to do is talk to the people around you who are shocked by the electricity or gas bills, and who do not understand how they will cope. The same thing is happening with food and building materials.

Higher prices are coming after the economic crisis and the pandemic to test Western societies, including Greece’s. There are no easy answers, especially in a country with particular characteristics in the market of goods. Those politicians who are in a hurry to dismiss it with overoptimistic forecasts, announcements about capping prices and similar ideas are digging their own hole. Inflation, like the coronavirus, is not an easy opponent to contend with.

It is easy to fall into the trap. US President Joe Biden himself has repeatedly made quixotic statements against rising costs because he is very afraid that it will cost him in the United States Congress elections next November.

Western societies are rather spoiled, enjoying a way of life that does not change easily. The idea that they will have to be careful about how much energy they use, as we did in Greece in the past, seems unreal. Obviously we will adapt, but the shocks will be big. Wages are rising but not fast enough to cover the gap. Inequalities remain significant.

Until now, political calculations and any relevant forecasts have been based on the evolution of the pandemic. Now that the pandemic could end, they must take rising costs very seriously. It is a problem that has neither an easy answer nor will it soon disappear.

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