Prices at the pump, skyrocketing energy prices, more expensive food products, unions grumbling for higher wages, government announcing a check for € 100 to catch up to 38 million French people: the question of a return of inflation is in the debates of the day. It is precisely this question that was dealt with before the members of the MEB (Monaco Economic Board), one of the best current economists, Ludovic Subran, chief economist of Allianz. The subject, “inflation in all its forms“, revolved around the questions of the day: will there be a return of inflation, the evil of the 80s and should we be worried? (MEB photo: Ludovic Subran during the conference in Monaco).

“The real question is whether it will last”

Then ? The diagnosis ? Several scenarios have been mentioned but Ludovic Subran was rather reassuring. Inflation has always existed, it is everywhere, it concerns everyone, can be measured in many ways and quickly becomes a political issue, underlines the economist. If the interpretations of the figures may give rise to debate, the increase in costs is real and the global causes identified: reopening of the economy, oligopolies in certain sectors, under-investment, hazardous energy policies, etc.

“But the real question is whether it will last”, valued Ludovic Subran. For him the answer is no. “I do not believe in excessive wage increases, monetary inflation (…) or a structural shock that would undermine the antidotes of inflation that are globalization, digitization and growth”. However, it does not rule out certain risks, in particular stagflation, a situation where excess inflation kills growth. In addition, some pressure on energy, consumer goods or even real estate could encourage governments and central banks to review their accommodative policy more quickly.

The scenario of a soft landing next year

But, again according to his analysis, the massive injection of money into the economy through aid measures is not the cause of the current situation. “30% of this money is spent in the real economy, the rest is debt repayment or hoarding“, Remark Ludovic Subran. Also, finally, he envisions a rather optimistic scenario with a form of soft landing after a period of overheating, especially in the United States, in 2022. We keep our fingers crossed and we will see next year if he got it right. .

• This conference was given on Tuesday, October 19 at the Salle Belle Époque of the Hôtel Hermitage in Monaco, in front of nearly 70 economic and official players. It was organized for MEB members, in partnership with Monaco Asset Management and JCE Monaco.