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The Global Inflationary Trend

September 24, 2005

Interesting article in The Economist on how inflationary pressures are increasing in America and elsewhere. Actually I would however rather describe it as monetary inflation increasingly taking the form of consumer price inflation, but let's not be picky.

As the article points out, the year to year increase in the consumer price index is expected to reach 4% in September, the highest since 1991. Moreover, not only are current inflation high, but inflationary expectations are also picking up as is indicated by consumer surveys, a rising spread between the yield of regular bonds and inflation-protected bonds and a rising gold price. A similar story is seen in the Euro-zone and Britain too. Japan's consumer price index is still falling, but that may change soon.

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