In recent years, consumers have faced unprecedented inflation, reflecting sharp price increases across various sectors. Although inflation rates have slightly subsided, recent trade policies, particularly tariffs imposed by the US on imports, could reignite price hikes. Economists suggest that these tariffs create a narrative for price increases and may lead to a self-fulfilling prophecy as companies leverage consumer expectations. Additionally, concerns about 'greedflation' arise, where corporations raise prices not solely due to increased costs but to boost profit margins, raising alarms about potential profiteering amid an already strained economic landscape.
The very idea that consumers are expecting a fresh inflation burst could become self-fulfilling by giving companies cover to put up their prices.
Tariffs provide exactly that story, says Paul Donovan, the global chief economist at UBS Wealth Management.
Despite general dissatisfaction with inflation, consumers are more accepting of rising prices post-pandemic, influencing pricing strategies.
Senator Elizabeth Warren warns that Trump's tariffs could lead to profiteering, allowing companies excuses to raise prices beyond justified increases.
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