Inflation rose at an annual rate of 7.9 percent in February, driven primarily by dislocations resulting from Russia’s war on Ukraine, notably in energy and food. This came on the heels of supply chain inflation that accelerated in 2021.

The question now is whether we are in a cycle like that of the 1970s, where inflation triggered by random shocks on different sectors becomes embedded in the economy and self-perpetuating, as expectations feed on themselves.

In the 1970s, there was sectoral inflation, not just in energy triggered by the two OPEC oil price hikes, but in food (triggered by bad harvests), in health care (the result of the new Medicare program having no limits on what doctors could charge), and in housing (the result of people putting more money into homes as an inflation shelter and bidding up prices).

This time, sectoral inflation is occurring not just in energy and in food but in consumer products, notably cars, suffering from supply chain shortages of semiconductors; and in housing, where a long-term scarcity of affordable housing keeps bidding up prices.

Some economists, most notably at the Federal Reserve, still believe that the core rate of inflation will begin to subside if and when the Russia-Ukraine war ends, and supply bottlenecks begin to ease. What is not occurring is wage-driven price hikes. Wages are now lagging far behind price increases.

One well-informed economist, Charles Goodhart, formerly a senior official of the Bank of England, argues that the long period of very low inflation and low interest rates was the result of global labor oversupply, which pushed down wages everywhere. (Someone referred to this as the reserve army of the unemployed.) Consumers ostensibly got bargains, but workers (mostly the same people) got screwed.

Goodhart predicts a long-term period of higher inflation as world labor costs rise. It remains to be seen whether he is right, since there is still plenty of global labor oversupply. But rising inflation smokes out falling real wages (leading to what someone referred to as class struggle).

For now, the question is how to prevent inflation that is purely opportunistic. Sens. Sherrod Brown and Sheldon Whitehouse have proposed a windfall profits tax on Big Oil. If high inflation continues, there is also a case for revisiting price controls, which were used to salutary effect in the early 1970s by that Bolshevik Richard Nixon.