I am not an economist so I have no business questioning anything written in The Economist. But I was a bit baffled by something I read in a recent article in that newspaper. Is immigration a contributor to the persistent inflation problem in the English-speaking world? The Economist seems to think so.

Inflation rose sharply across the developed world in 2022, reaching as high as 11 percent in some places, the highest level since the 1970s. The rapid increases in prices were due to a combination of pandemic-induced government stimulus programs, supply-chain disruptions (caused by the pandemic), and the dramatic rise in energy prices as a result of Russia’s invasion of Ukraine. According to The Economist, by June this year, inflation across OECD countries had declined to an average of 2.5 percent, not too far from the 2 percent target of most central banks. However, the newspaper noted that in Anglophone countries, in particular the U.S., the U.K., Canada and Australia, inflation remains quite a bit higher than the June average for the OECD. In Britain, core prices (excluding food and energy) rose by 4.3 percent (the worst overall) in the year to the second quarter of 2025.

Journalists at The Economist went looking for reasons for the persistence of inflation in the rich Anglophone countries. They identified a couple. The first was large stimulus spending. Data the newspaper provided show that from 2022 to 2024, budget deficits in English-speaking OECD countries increased by 2 percent of GDP on average, while deficits contracted elsewhere. Those large injections of cash into national economies in the Anglosphere boosted demand and caused prices there to rise more than they did in other places. Those effects are still being felt.

Why did governments in rich English-speaking countries spend so much more on stimulus programs than their counterparts elsewhere? Are policymakers there more afraid of their constituents and are therefore more inclined to loosen the purse strings to satisfy them? Or are Anglophone countries simply more profligate than the rest of the world? The article didn’t shed any light on why there were language-based differences in spending levels, but those were some of the questions that came to mind.

The Economist also suggested immigration as a possible driver of the persistent inflation in the wealthy part of the Anglosphere. That raised some questions in my mind as well. The view of The Economist is that in the short run, the influx of immigrants to English-speaking countries may push up prices of some things, especially housing. To some extent, that makes sense. However, there are a couple of counteracting effects of immigration on prices that I think should be considered. First, it is a widely held view that immigrants are more willing to work for lower wages than natives do. That helps keep labor costs across the economy lower than they would be otherwise. In fact, this downward pressure exerted on wages by the arrival of immigrants is often cited as one of the key reasons some natives vehemently oppose immigration.

Second, immigrants expand the labor pool. Without their presence, many companies, as well as entire industry sectors such as agriculture, hospitality and construction, would struggle to find enough workers. That worker shortage would drive up labor costs, raising the prices of a whole host of goods and services.

There are two kinds of immigrants. In the first category are people who enter their destination countries through legal channels. Such individuals, some of whom may even be oligarchs, tend to be people who have the means to rent or buy houses and purchase other goods and services without having to work to earn money right away. That short-term demand boost without an accompanying increase in the labor supply is perhaps what The Economist was thinking about.

In nearly every country, that first category of immigrants forms a tiny minority of the overall immigrant population. The overwhelming majority of new arrivals are desperately poor people who cannot afford anything until they earn some money. They tend to take pretty much any jobs they can find, and whatever wages they are offered. Had The Economist considered both factors, the labor-supply addition and the short-run demand boost, it would have been interesting to see which one the newspaper thinks has a greater influence on the aggregate price level.