Are we in a new era of permanently higher prices?

Persistent inflation is increasingly likely as the global economy shifts away from the low-inflation environment of the past three decades. The previous era of cheap goods, driven by the integration of China and Eastern Europe into the global workforce and rapid technological progress, is ending. Climate change and supply chain vulnerabilities now act as recurring supply shocks that sustain higher price levels. Inflation disproportionately burdens the bottom 80% of the income distribution, while the wealthy remain largely protected. Borrowers with fixed-rate mortgages and corporations with inelastic demand benefit from these conditions, whereas savers face negative real returns as banks retain higher interest rate spreads. Political economist Mark Blyth highlights that these structural changes suggest a future of sustained, higher inflation rather than a temporary spike, challenging the assumption that current economic conditions will return to historical norms.