BUDAPEST, Hungary — From appliance stores in the United States to food markets in Hungary and gas stations in Poland, rising consumer prices fueled by high energy costs and supply chain disruptions are putting a pinch on households and businesses worldwide.
Rising inflation is leading to price increases for food, gas and other products and pushing many people to choose between digging deeper into their pockets or tightening their belts. In developing economies, it’s especially dire.
“We’ve noticed that we’re consuming less,” Gabor Pardi, a shopper at an open-air food market in Hungary’s capital, Budapest, said after buying a sack of fresh vegetables recently. “We try to shop for the cheapest and most economical things, even if they don’t look as good.”
Nearly two years into the COVID-19 pandemic, the economic impact of the crisis is still being felt even after countries raced out of debilitating lockdowns and consumer demand rebounded. Now, another surge of infections and a new coronavirus variant, omicron, are leading countries to tighten their borders and impose other restrictions, threatening the global economic recovery.
Omicron has raised new fears that factories, ports and freight yards could be forced to close temporarily, putting more strain on global commerce and sending prices even higher.
“A new round of infections could further aggravate supply chains, putting even more upward pressure on inflation,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
The economic reverberations are hitting central and Eastern Europe especially hard, where countries have some of the highest inflation rates in the 27-nation European Union and people are struggling to buy food or fill their fuel tanks.
A butcher at the Budapest food market, Ildiko Vardos Serfozo, said she’s seen a drop in business as customers head to multinational grocery chains that can offer discounts by buying in large wholesale quantities.
“Buyers are price sensitive and therefore often leave us behind, even if our products are high quality. Money talks,” she said. “We notice that inflation is not good for us. … I’m just glad my kids don’t want to continue this family business, I don’t see much future in it.”
In nearby Poland, Barbara Grotowska, a 71-year-old pensioner, said outside a discount supermarket in the capital of Warsaw that she’s been hit hardest by her garbage collection fee nearly tripling to 88 zlotys ($21). She also lamented that the cooking oil she uses has gone up by a third of its price, to 10 zlotys ($2.40).
“That’s a real difference,” she said.
The recent pickup in inflation has caught business leaders and economists around the world by surprise.
In spring 2020, the coronavirus crushed the global economy: governments ordered lockdowns, businesses closed or slashed hours and families stayed home. Companies braced for the worst, canceling orders and putting off investments.
In an attempt to stave off economic catastrophe, wealthy countries — most notably the United States — introduced trillions of dollars worth of government aid, an economic mobilization on a scale unseen since World War II. Central banks also slashed interest rates in a bid to revive economic activity.