Inflation speed bumps on the road to a net-zero future

Three interlinked sources of inflation likely to be encountered in the decarbonisation pathway – fossilflation, greenflation and climateflation.

A solar panel system installed in the village of Toula in northern Lebanon. PHOTO: AFP
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The most immediate macroeconomic challenge facing policymakers in a post-Covid-19 world is to quell inflationary pressures and ensure that inflation expectations do not become entrenched.

Data from the International Monetary Fund's July 2022 World Economic Outlook projects global inflation this year to reach 8.3 per cent, averaging 6.6 per cent for advanced economies and 9.5 per cent for their developing counterparts, the highest inflation rate witnessed in decades. This global inflationary surge has impacted everyone, especially those in lower-income countries and lower-income households in developed countries.

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