Inflation remains in the spotlight as economies tick over

This week there was a modicum of good news; inflation in the US continued to abate with the fabled “soft landing” of the US economy still possible, despite a slight uptick in unemployment claims. In the UK surprisingly robust growth figures caught out most people, with the data not reflecting either the market consensus or general mood of the country. It is baffling that a large increase in interest rates, a huge squeeze on the consumer as bills eat into disposable income and high energy and input prices aren’t having the effect expected. There could be some underlying growth factor no one has noticed, or the negative impacts of the last year are just taking longer to manifest.

Elsewhere inflation continues to be the dominant theme, with persistent deflation being a real possibility in China while in parts of Europe it has fallen below target and the falling cost of housing likely to continue to put downward pressure on inflation in the US. Despite this a rise in energy prices, with both oil and gas increasing significantly in the last few weeks, could mean the inflationary beast has a bit of fight left in yet.

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