Price inflation is starting to fall in many countries but it still remains way above the typical 2% target of most major economies. In the UK, inflation has been above target since August 2021 and in double digits since August 2022.

In 2021, I was one of the economists who warned that high inflation might not be “transient”, as major central and various think tanks were claiming at the time when they said rapid price rises wouldn’t last long. I argued for action before high inflation became embedded in the economy and made the UK a poorer country.

Unfortunately, this has now happened. And while I believe inflation will start falling from current highs soon, it’s going to be tough to bring it back to the government’s 2% target.

Central banks often point to the war in Ukraine and spiking energy prices when explaining recent rapid price rises. But US and UK inflation was already at a four-decade high before the start of the war. The truth is that the global economy is now entering a period of permanently higher inflation fuelled by four deeper forces.

1. ‘De-globalisation’

One of the long-term drivers of inflation is an economic cold war. The Trump administration in the US led initial efforts to impose trade sanctions against China and the current administration seems even more determined to end US reliance on Chinese products. The economic relationship between the west and Russia –- a major global exporter of energy and commodities – has entered a similar period of decline.