With July inflation ramping up again on Tuesday, it’s obvious the battle ain’t over yet. The headline inflation rate jumped to 3.3 per cent from last month’s 2.8 per cent. While mortgage costs and food are major contributors to our stubborn inflation, energy prices have risen 5.8 per cent in the past four months, thanks in part to the carbon tax hike last April 1.
As the world continues its march to net-zero emissions by 2050, an interesting debate is rearing its head as to whether the energy price inflation will affect monetary policy. That point was made last year by Isabel Schnabel, a member of the European Central Bank’s Executive Board: “As we build a more sustainable economy, we face a new age of energy inflation … that can be expected to lead to a prolonged period of upside pressure on inflation,” she warned
