Inflation was undoubtedly the main story of 2021 as surging energy prices and supply chain bottlenecks saw consumer prices rise at their fastest pace for nearly 40 years.
While some of these cost pressures are expected to ease in 2022, we do not think investors should be complacent and assume that inflation will automatically fall back to earlier levels. We believe there are a number of second and third order effects which need to considered, under which high inflation in 2021 could feed into higher inflation in 2022 and beyond. There are a number of mechanisms by which this could happen. In the UK, the classic example is through the ‘triple lock' pension, whereby state pensions get uplifted by the higher of 2.5%, average wages or the consumer pric...
To continue reading this article...
Join Investment Week for free
- Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
- Get ahead of regulatory and technological changes affecting fund management
- Important and breaking news stories selected by the editors delivered straight to your inbox each day
- Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
- Be the first to hear about our extensive events schedule and awards programmes