WASHINGTON, DC – Inflation has become a hot-button political issue worldwide. In the United States, the consumer price index increased at an annual rate of 8.6 per cent in May, and EU inflation is not far behind. The root cause of the problem is that too much money is chasing too few goods.

Consumers saved more than usual when they cut back on expenditures during the Covid-19 pandemic, then increased their purchases after the lockdown restrictions were lifted. But supplies increased more slowly, because it took time to ramp up production again, and because many workers were still becoming ill. While shipping bottlenecks and labour shortages further constrained production levels, increasing fiscal deficits and continued ultra-loose monetary policies put further pressure on prices until 2022.

Now, US President Joe Biden says his top priority is to “bring inflation down”. Yet in a recent speech on the issue, the Washington Post notes that he “laced into oil corporations and shipping conglomerates”, accusing them of “chasing excessive profits instead of lowering prices for consumers”. Not only have oil companies failed to boost output, but “the ocean shipping cartel”, Biden claims, has operated as an oligopoly, raising “their prices by as much as 1,000 per cent”.