Inflation is not only the subject of discussions on economic trends. For the general population, it is also a question of how to consider it in our decisions on consumption and saving. What is more, it poses a significant risk to reducing the real value of our savings and salaries.
Figures of around eight percent of annual price growth in the EU are indeed high, given the fact that not long ago we feared a downward trend in prices – deflation. However, looking at the reason for the current inflation, we can understand how forecasters expect it to slow down both at the global and the European level. This year’s price increases in Europe are mainly driven by the shock to natural gas prices and supply caused by the war in Ukraine.
Less can be expected from green energy sources and more from the change in energy supply flows, which experts anticipate to lower inflation already this year and especially in 2023. The high level of prices of individual products and services (especially transport) will remain for some time; however, the positive expectations of reducing their growth should prevent our greater caution (higher elasticity in relation to price changes).
We are faced with a choice of how to elastically react to the current situation. It is interesting to note that expectations on household consumption are not pessimistic and, due to the general economic situation, which is (let us not forget) determined by rapid changes in technology, investment in knowledge will certainly be the last item that would be sensible to cut back on.