Economists Claim Inflation Won't Last, But CEOs Disagree

Executives who run companies making everything from airplane parts to cars and steak burritos are at odds with economic policymakers on how durable the recent surge in US inflation will be and see higher prices hitting margins and profits through the remainder of this year, if not longer.

Photo Insert: Inflation is giving rise to a debate between economists and CEOs

Rising inflation has been the immediate focus of Federal Reserve officials and other global policymakers in recent weeks. There is a growing divide between those worried prices may be increasing too quickly and those arguing that economies need much more time to grow, a Reuters analysis claimed.

The International Monetary Fund (IMF) said it views inflation pressures as the transitory result of "supply-demand mismatches" as economies reopen, with inflation expected to return to pre-pandemic ranges in most countries in 2022.

Still, it warned that persistently high inflation readings could lead to a "reassessment" of the monetary policy outlook by the Federal Reserve and other central banks in advanced countries. read more

A global survey of nearly 500 economists taken this month also concluded recent rising inflation in key economies around the world would be transitory. Over 70% of economists, or 152 of 209, said the current uptrend in global inflation was transitory, the Reuters poll showed.

Big corporations, however, are increasingly sounding the alarm in quarterly earnings reports as they struggle to cope with supply chain disruptions and labor shortages that are pushing up prices as economies rumble back to life after COVID-19.

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