Supply chain disruptions are still above historical levels and companies are also still recovering from COVID-related challenges. In昀氀ation occurs in the normal course of economic activity, rising and falling over time. Usually, it doesn’t draw much attention until it results in sharply higher prices and reduces consumers’ purchasing power. In January 2023, the Consumer Price Index (CPI) for urban consumers, including food and energy, was about 6.35%, whereas two years earlier, the CPI was only 1.39%. The U.S. Federal Reserve raises interest rates to curb in昀氀ation, which corresponds with higher borrowing costs. Two common measures of The current trend in economic in昀氀ation is at its highest point in 40 years. That economic in昀氀ation are the change in the Consumer translates into signi昀椀cant challenges Price Index (CPI) and for individuals and businesses. Producer Price Index (PPI). The CPI for all items has Social in昀氀ation refers to the phenomenon of higher jury verdicts risen 6.4% since January and court awards, typically because of changing attitudes 2022, while the PPI for that favor plainti昀昀s. Unlike economic in昀氀ation, however, social 昀椀nal demand (i.e., 昀椀nished in昀氀ation cannot be adjusted by raising interest rates. Judicial goods) has increased 6.2% reform is one path to reducing growth in claim expenses. since December 2021. Additionally, social in昀氀ation continues to raise its head in the Those increases are the form of event-driven litigation. Virtually any major negative steepest in decades. corporate news event spawns costly director’s and o昀케cer’s (D&O) litigation, including derivative lawsuits against directors whose settlements are not indemni昀椀able. What these trends mean for businesses For businesses across all industries, rising economic and social in昀氀ation are immediate challenges. In addition to paying more for materials and labor, businesses are seeing changes in the valuation of their insured property and emerging risks in their supply chains. Higher costs of production usually result in increased prices for purchasers, which can reduce pro昀椀tability and force businesses to defer growth initiatives. Higher interest rates also raise the cost of capital, which can impact businesses’ debt burdens and access to credit. Meanwhile, social in昀氀ation is causing steep growth of claims expenses in property, liability, health care, and workers’ compensation insurance programs. Business InsurBusiness Insurance Tance Trrendsends 33