Inflation is back. After being dormant for much of the past quarter century, inflation has taken off in recent months. Prices have gone up a lot for almost everything: a gallon of gas, vehicles, appliances, clothes, and even the cost of that Thanksgiving dinner.

For the typical American household, accelerating inflation is a financial blow. It now costs $ 200 more per month to buy the same things it did a year ago – roughly the amount a household spent on clothing or furniture and appliances before the pandemic.

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The crucial question is how long this uncomfortably high inflation will last. The answer, perhaps unsurprisingly, is that it depends on the pandemic. The pandemic, and more specifically the wave of the Delta variant of COVID-19 that peaked in mid-September, has done a lot of economic damage, slowing growth and igniting high inflation.

Delta was particularly pernicious. While it hit us hard, it hit Asia even more, and that’s where most global supply chains start. China and many Southeast Asian economies have a non-COVID-19 policy – they stop things if they spot even one case. Semiconductor factories in Malaysia that produce chips for cars and consumer electronics have been closed, port terminals in China have been closed, and clothing manufacturers in Vietnam have gone out of business. This explains the shortages and price spikes for many products.

Labor shortages, which have plagued businesses since the vaccine rolled out and the economy quickly reopened last spring, were also exacerbated by the Delta Wave. Millions of people could not work because they fell ill with the virus, had to care for sick family members or feared they would get sick. Companies have raised salaries and given signing bonuses to help fill vacancies and pass the higher costs on to customers.

Many already nervous consumers have been spooked by the increase in infections and hospitalizations and have withdrawn from trips and restaurant meals and used some of their freed up money to buy the very things that are now in short supply due to supply chain disruptions and labor shortages. . With store shelves and warehouses emptied, prices rose again.

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The pandemic has also blurred demand and supply in many markets, among the most vital being the global oil market. Global demand for and supply of oil was crushed at the start of the pandemic. Demand has since recovered and is almost back to what it was before the pandemic. However, as producers pump more oil, they have been slow to ramp up production in line with higher demand. That’s why we’re paying almost $ 3.50 for a gallon of regular, down from just over $ 2 a year ago.

Higher gas prices are especially hard on people’s wallets and psyches. Since we all buy gasoline and it’s a price we’ll see at least twice a day, nothing is more disturbing than seeing it skyrocket. It hammered polls on consumer confidence and President Biden’s approval rating. Higher gasoline prices also add to inflation more broadly, especially for food, as a large part of the cost of getting food to store shelves is the cost of transporting it by truck.

If you accept my diagnosis of what is behind the spike in inflation, it should give you some reassurance that inflation will moderate as the pandemic subsides. Of course, it would be foolish to think that there won’t be future waves of infections. Indeed, one may already be in progress.

But it’s reasonable to assume that each new wave will disrupt the health care system and the economy less than the last. If so, inflation will still spike for several more months, but it should be much less painful within a year.

You’ll soon know if my inflation outlook is on the money. Oil and gasoline prices are expected to peak now and will decline as OPEC and US frackers steadily ramp up production, drawn by current high prices.

Food prices will then decline as it becomes cheaper for truckers to transport produce and meat to grocery stores. Prices for new and used vehicles will then fall as automakers obtain the semiconductors needed to build more cars and replenish depleted lots from dealerships. And while the prices of clothes, appliances and furniture won’t go down that much, there will be great deals available by next summer.

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Certainly, inflation will remain an issue for some things even if the pandemic ends. Rents quickly come to mind. They have increased rapidly given the lack of affordable housing. There is a serious shortage of housing for rent and for sale. Rent growth is particularly accelerating now that young people in their twenties who returned to live with their parents during the worst of the pandemic are leaving. This movement will soon end and rent growth will moderate, but the housing shortage will take time to resolve and rents will continue to rise sharply.

It’s wise to view any forecast with skepticism, but there’s a good chance the pandemic will continue to recede and inflation will soon return to hibernation.

Mark Zandi is Chief Economist at Moody’s Analytics.