Ways of measuring inflationInflation in often measured by the consumer price index (CPI), which measures the total price of a fixed basket of goods and services over time. This represents a measure of costs that consumers face, calculated to represent how much changing prices affects consumers. However, those more interested in business look to the producer price index (PPI) or others, which represent the costs of firms and may influence financial markets differently. Because each sector experiences inflation in a different way, many analysts also look at the CPI in their selected industries. Similarly, different people have different economic interests. Older generations, more interested in the changing price level due to their tendency to live on a fixed pension, tend to consider inflation to be a greater concern than younger people.
Coronavirus, war in Ukraine, and inflationThe aftermath of the Coronavirus pandemic was accompanied by high inflation levels, starting in the latter half of 2021. As production and transport was brought to a halt in 2020, it took time to bring production to a normal level as demands increased. Moreover, China's continued no-covid strategy, with lockdown of complete cities such as Shanghai, results in continuing production dusruptions.
Furthermore, the Russian invasion in Ukraine in February 2022 further spurred global inflation, affecting especially certain food products such as wheat and corn, as well as energy sources such as natural gas, which can be observed in the chart above. The rising inflation and leaping energy bills mean that people increasingly struggle with making ends meet, and higher fuel costs will probably lead to manufacturers increasing their prices further, meaning that it is rather unlikely to see the inflation pressures ease in the coming months.