Whereas inflation was seen as a transitory phenomenon at the start of the year, it has gained a little more traction than expected, especially in the US.
Price increases this year have been stronger than both
'Inflation has surged in the US, hitting a 30-year high of 6.2 per cent in October this year. Even after deducting the most price-volatile sectors, such as energy and food, inflation remains very high at 4.6 per cent. When the biggest and most important economy in the world is struck by high inflation, we also risk it spreading to other regions and countries, including
Even after deducting the most price-volatile sectors, such as energy and food, inflation remains very high at 4.6 per cent. When the biggest and most important economy in the world is struck by high inflation, we also risk it spreading to other regions and countries, including
Mikael Olai Milhoj
Chief analyst,
Highest inflation in
Inflation in the US normally hovers around 2 per cent - and was all the way down at 0.3 per cent when Covid-19 struck. Inflation in the eurozone was 4.1 per cent in October and 4.1 per cent in
Inflation in
'The US is currently experiencing very pronounced price increases on used cars and car leasing. One reason is that the market for microchips is very tight at the moment - and that has hit the number of cars being produced. Hence, it is difficult to meet demand through the production of new cars, which is pushing prices higher. We can see the same trends in other markets, too,' explains Mikael Olai Milhoj.
Rising wages in the US could create an upward inflationary spiral
The US economy is largely back on track, and demand for labour is high. This has fuelled the highest level of wage growth in 10 years. If wage growth begins to accelerate even more, it could ultimately push the costs of rising wages over onto prices, so consumers end up paying - and thus creating an upward inflationary spiral.
'The reaction of the central banks to this situation will be interesting to observe. Monetary policy in
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