It’s been ages since we had to worry about big price rises, as this chart of underlying inflation in the OECD, a group of developed countries, reminds us. The key reason for disinflation in the past two decades was globalisation, which shifted power from labour to capital, says Andreas Niehaus in Finanz und Wirtschaft.
The global workforce almost doubled between 1990 and 2001, while automation and digitalisation also lowered production costs. This halted wage-price spirals even when growth was strong. But inflation may be making a comeback and central banks don’t seem ready to respond.