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Thursday, February 22, 2024

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Rising Prices Worries World Leaders

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Increasingly under attack, as polls show public concern over rising prices, President Biden has made a public statement on inflation.

“My administration understands that if we were to ever experience unchecked inflation over the long term, that would pose real challenges to our economy. So, while we’re confident that is not what we are seeing today, we are going to remain vigilant about any response that is needed,” said President Biden in a July 19 statement.

To deliver on President Biden’s top priorities, the Democrats in the Senate have on July 13 agreed to a $3.5 trillion package to expand Medicare benefits, boost federal safety net programs and combat climate change. An additional $600 billion has also been approved in a separate bipartisan infrastructure plan.

Clearly, this has not been enough to reassure Americans over depleting purchasing power. Costs of items, ranging from housing, food and gas to lumber and second-hand cars have gone up. An economic phenomenon of sudden and massive rise in prices that has not been registered in the United States in 40 years according to experts.

According to the US Bureau of Labor, inflation is outpacing gain in wages at 5% and still increasing while inflation rate has rarely been crossed 2% in the last ten years.

Solicited by the press, White House aides said that the US Government believes that “phenomenon” is temporary and is caused due to the economy readjusting to the new normal, following a once-in-a-century crisis.

In France, inflation is still relatively low. However, an increase in prices has been noted since the beginning of the year. Between June and May 2021, inflation rose by 0.2% and by 0.3% between April and May.

Although the European Central Bank predicts an average inflation rate of 1.4% for the whole of the EU Zone, French economist, Patrick Artus calls for caution.

Artus who has just published a book on post-pandemic economics believes that a series of factors ranging from relocalisation of large businesses back to France to the ageing population will soon weigh-in. Although he too agrees that inflation in its current shape is temporary, he also warns about other factors that have not been considered by the statistics institutions. Should inflation escalate, he says, the crisis risks being even more dreadful.

In Mauritius, inflation rate as at April 2021 was at 2.6%. In 2020, the average inflation rate amounted to 2.5% according to official data. Price increase in Mauritius has led Mauritian Government to impose price controls and maximum mark-ups on groceries.

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