How to calculate inflation when there are few trades and prices? How much does a car cost if it is not produced or sold? And a pair of shoes? Or a beer at the bar or a plane ride or a vacation? Without detection, because shops and public establishments and more are closed, there is no measurement. It will be interesting to see which rabbit will be pulled out of the hat by statisticians, who are called to an unenviable exercise.
In the absence of a thermometer, we can speculate about forces driving costs and prices.
Here and now, in economies infected with the coronavirus consumption is concentrated in open residual commercial spaces and concern basic necessities. Or they spread in the vast internet, with an increase in online purchases of every other type of goods (except, perhaps, i big tickets, such as cars); also because they have remained the only channel for companies to reach customers.
For the former less competition, reduction in shopping times in the shop (while lengthening those to enter them) and an increase in some costs (equipment to protect the health of staff, logistics, spaces occupied by non-salable goods) push the outlay upwards, perhaps only under shape of fewer promotions. At the opposite, in the network the competition in the seconds has intensified, discounts and offers flock, the transparency is greater.
in foodstuffs, alongside enormous waste (rivers of milk thrown away because it was not purchased by the usual customers), there are difficulties due to the lack of manpower for picking fruit and vegetables and therefore rising prices.
But all this does not make inflation. Alone short-term trips. Looking beyond, it is necessary to weigh the increase in (temporary?) unemployment which is pressing wages and demand downwards, the lesser globalization which is pushing them upwards, the lower consumption due to impoverishment and the cuts in investments, which together immediately increase the unused capacity.
For the synthesis we rely on the words of Jerome Powell, president of the FED: in past years everyone said that with the money created there would be more inflation, while inflation has always surprised on the downside. It will surprise again this time and in the same direction.
PS: in this time of enormity of economic phenomena, OPEC+ has launched a mega cut in oil production over ten million barrels. But the price of crude has fallen. Because demand has dropped by 35 million barrels. After what we are observing, nothing will surprise us anymore.
