In my view, COVID led to inflation, coupled with the various government bailouts, including the last one. Households ended up spending a lot less than normal when much of travel and entertainment was shuttered. A lot of folks then wanted to make up for lost time, and figured they had a year's worth of "savings" to spend. So, demand spiked at about the same time that supply of various things was still limited (including fuel) by lingering COVID issues (oil production can't increase very rapidly). And I think a lot of folks laid off during COVID weren't anxious to return to work, maybe they made other plans, so wage costs increases a lot. There were help wanted signs everywhere.
Once inflation starts, it leads to more inflation, spiraling usually. We're lucky that wasn't worse.
The current US inflation rate of something like 3.5% is more embedded, not due to some special cause, and the Fed trying to get to 2% is finding it is stubborn, and they have not managed to kick the economy into recession which MIGHT lower it more. I also think the Fed acted about 9 months too late in tightening, one could see all this about to happen pretty readily I think. I did anyway.
We spent about a year here with virtually no travel or dining expenses and I know we built up more "cash" than I planned, so we too were anxious to get out and hit the trail, and did.
I don't think it likely we'll see consistent 2% inflation without an economic downturn. And of course somehow magically the Federal government is now addicted to deficits of $2 trillion a year or more, that to seems unlikely to change any time soon, if ever.
