Rising inflation is giving consumers and investors nightmares of a repeat of 2022. Yet, there’s little reason to worry things will get that dire, according to Schroders, which manages $1.1 trillion in assets.
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Consumer prices rose 3.8% year-over-year in April, the Bureau of Labor Statistics reported on Tuesday, as high oil prices trickle down throughout the rest of the economy. It’s a far cry from 9.1% seen in 2022, but it marks a stark uptrend from the February lows of 2.4%.
Still, it’s likely that inflation stays somewhere in the 3%-4% range from here, Simon Webber, Head of Global Equities at Schroders, told Business Insider.
In an interview on Thursday, Webber laid out a two reasons the war-fueled surge in prices since March is not a pandemic inflation redux.
First, we’ve already likely seen the worst of the surge in oil prices. Crude has fallen below wartime peaks, so the situation in Iran and the Strait of Hormuz would have to deteriorate significantly again from here, Webber said.
“We’d need a further rise in oil and gas prices,” he said.
Second, it’s a much different economic environment than in 2022. Back then, consumers were flush with stimulus checks, job openings were plentiful, and wage and job growth were soaring. Today, job openings are more scarce, and wage and employment growth are lower.
Recent consumer sentiment data from the the University of Michigan reflects the tough economic backdrop: consumer are more negative about the economy than at any other point in the university’s survey history going back to 1978.
All of this means consumer demand is generally weaker today than it was a few years ago, which will make it more difficult for companies to pass rising costs on to the consumer, Webber said.
“The consumer’s already exasperated with affordability and price increases and not in the mood to accept another round of big price increases,” he said. “So I think it will be much harder for companies to pass on price this time than when everyone was coming out of COVID and there was a lot of demand.”
Webber likened the situation to the tariff episodes in April 2025, when companies initially seemed to hold off on passing costs onto consumers because they weren’t sure how permanent the stated tariff levels would be.
The shorter the disruption to oil flows and production, Webber said, the less likely it is that consumers continue to see rising prices.
While we may not see 2022-level inflation, there are still portfolio risks associated with rising consumer prices. In terms of how he’s navigating this environment, Webber said the firm is reducing exposure to banks, as rising costs and economic volatility could put some companies out of business, leading to loan defaults.
“Certainly, the longer the whole shock goes on, we’re going to see more non-performing loan increases,” Webber said. “We’re not talking about a financial crisis, but just a normalization of credit losses. That will be just a more negative outcome for bank earnings than it has been.”