Central banks everywhere seem to have finally realized the severity of inflationary developments. For quite some time, policymakers debated whether the price-rise in energy, food, transportation and housing was a blip caused by the economic bounce-back after the COVID shutdown, or whether it was longer term and more endemic. It seems evident now that those who predicted a longer-term inflationary period were correct. So, what does that mean for infrastructure investors? Is this the time for infrastructure, which has long been touted as an inflation hedge — but untested as such because we have not seen inflation in decades — to shine?
Riding the wave
Historically, returns from certain infrastructure investments have had a positive correlation to inflation, especially when they are combined with high economic growth, according to BlackRock’s Inflation and Real Assets report. And, despite fears of an impending recession — GDP fell for two consecutive quar