Stories tagged with "energy prices"

Inflation and oil price shocks

Posted by Yankee on October 10, 2005 - 10:52am
Topic: Economics/Finance
Tags: energy prices, inflation [list all tags]

The conventional wisdom, especially among those who lived through the oil embargo of the 70s, is that higher oil prices will lead to high inflation. But an article by Stephen King, managing director of economics at HSBC, hypothesizes that this may not be the case this time around.

According to King, the worst inflation scenario is that workers (who are presumably unionized) manage to get wage increases in the face of higher prices. Ultimately, this may induce companies to raise prices even higher. This turns out to be especially problematic for retirees, who are on a fixed income. King goes on to argue that since society has changed since the 70s, it's unlikely that such a shift in financial burden is likely to be acceptable.

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