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The post-pandemic inflation shock seemed to be fading into a soft landing. In “Last mile”, The Economist argues that the descent has stalled: price growth across rich countries is edging upward again, and central banks are beginning to raise interest rates before a temporary energy shock can spread into wages and expectations.

Inflation broadens beyond energy

War in Iran has pushed up oil and natural-gas prices. European gas costs have more than doubled from their pre-war level, helping drive euro-zone energy inflation into double digits. American petrol has climbed from less than \$3 a gallon in January to just over \$4. These moves explain much of the renewed pressure, but not all of it.

The magazine estimates that average annual core inflation across rich economies, excluding food and energy, rose from 2.7% in early 2026 to 2.9%. Its comparable data for 23 wealthy countries show services inflation increasing in two-thirds of them even as reported wage growth slows. That combination is uncomfortable because services prices tend to reflect domestic labour costs and can be more persistent than commodity-driven inflation. Possible explanations include poorly measured wage growth and weak productivity, which leaves businesses less room to absorb pay increases.

Headline inflation has also stopped converging on the 2% targets used by many central banks. Euro-zone inflation reached 3.3% in August, its highest level in three years, while Lithuania approached 6%. Even Switzerland’s modest 0.8% rate was a two-year high. The pattern is uneven, but broad enough to make the last stage of disinflation look much less secure.

Central banks move before expectations do

New Zealand, Australia, Japan and South Korea have already raised rates, and the article expected the European Central Bank and Federal Reserve to follow. Policymakers remember being criticised for reacting too slowly in 2022. Their concern is that energy costs could feed into wages and other prices, turning a supply shock into sustained inflation.

For now, the most dangerous signal is largely absent. Market measures of long-term inflation expectations have not shifted much, and a European Central Bank survey found that consumers expected less inflation over the next year than they had a few months earlier. Alternative indicators based on news coverage point to strengthening global price pressure, but their forecasting record is mixed.

That uncertainty explains the pre-emptive response. Waiting for expectations to rise would give inflation time to become embedded; tightening early risks slowing economies for a threat that may fade. The article’s conclusion is that more central banks are likely to choose the first risk. The soft landing has not become a crash, but the runway has receded and a new tightening cycle may be under way.

Source: The Economist, September 12th 2026, “Last mile”, Finance & economics, p. 67; listed in the contents as “Inflation returns”.