Inflation

Chancellor: Time to inflation-proof portfolios

21 October 2021

As consumer prices and interest rates rise, financial markets will become more volatile. Investors can protect themselves by reducing duration, their exposure to rates, and even by holding cash. That may sound boring, but it provides a means to buy assets when they become cheap.

Chinese inflation sneaks closer to global shoppers

21 October 2021

The country’s consumer prices stayed flat despite soaring commodity costs. That’s due to volatile pork prices and weak local spending. But the energy crisis and strong exports raise the risk that stretched manufacturers pass the higher costs on to customers at home and beyond.

Inflation is one product P&G isn’t pushing

19 October 2021

The $346 bln consumer goods company increased prices 1% across divisions that sell razors and toothpaste in its latest financial quarter. But its own costs jumped 13%. Inflation will take its toll, but P&G has profit and cash to spare. In tough environments, it pays to be big.

Fed heretic punctures inflation policy groupthink

4 October 2021

A senior adviser at the U.S. central bank has attacked the notion that people's price expectations today influence future actual inflation rates. Challenging conventional wisdom is always useful. And if Jeremy Rudd is right, policymakers may be looking the wrong way.

Dollar stores have more than an inflation problem

1 October 2021

Dollar Tree is upping the number of stores that sell goods for $3 and $5 rather than $1. Part of the problem is skyrocketing costs. But Americans' shopping habits are also changing. For CEO Michael Witynski, charging higher prices is just the first step.

ECB has the least worrying inflation problem

1 October 2021

Euro zone consumer prices rose 3.4% in September, strengthening the hand of those who want boss Christine Lagarde to wind up emergency monetary stimulus. But structural unemployment is higher, the economy less robust and fiscal policy less stimulative than in the United States.

Easing crisis leaves Lagarde with tough transition

30 September 2021

The European Central Bank boss will have to fall back on a pre-pandemic bond-buying scheme once its emergency purchase programme runs out. The former is less flexible and may force Christine Lagarde to choose between flouting rules or curtailing support to the fragile economy.

Stagflation jitters are at least half wrong

29 September 2021

High inflation and stagnant activity would be a noxious mix for markets. Central bankers have the tools, and likely the will, to combat the former. But when price pressures are a symptom of supply shocks, as now, monetary policy is a crude weapon that will lead to weaker growth.

UK trucker shortage tows inflation in its wake

27 September 2021

The government is recruiting foreign drivers, suspending competition rules and may use the army to ease a fuel crunch which triggered panic buying. That should limit the hit to Britain’s road-dependent economy. But sharply higher wages will accelerate annual inflation towards 4%.

Turkey goes deeper into parallel monetary universe

23 September 2021

Ankara cut its main policy rate to 18% from 19%, kowtowing to President Erdogan just as other central banks take the opposite tack. A weaker lira and soaring energy bills add to the economy's inflation pains. With two years to another election, there’s little respite in sight.

Transitory inflation is a fig leaf that’s slipping

23 September 2021

The Fed, ECB and Bank of England reckon strong price pressures are a temporary phenomenon. But new forecasts and comments suggest inflation overshoots may persist next year, and last even longer in America. That’s hardly short-lived. Pretending otherwise will lead to problems.

Rishi Sunak pays if BoE inflation bet goes awry

22 September 2021

Surging prices mean the UK finance minister has to pay more interest on outstanding debt. Blame Britain’s love of bonds tied to inflation. The bill will be even bigger if price pressures are more stubborn than the Bank of England expects, forcing hasty monetary policy tightening.

Emerging economies face stages of inflation grief

16 September 2021

Central banks’ reactions to rising prices come in three steps, BNP Paribas reckons: denial, acceptance, and action. Brazil and Chile are further along, having hiked rates quickly as pressures mounted. Investors will prefer them to countries stuck in the first stage, like Turkey.

Capital Calls: Microsoft’s buyback, Railway M&A

15 September 2021

Concise views on global finance: the software giant’s $60 bln stock repurchase plan is smaller than it sounds; meanwhile, a tangled takeover battle for train operator Kansas City Southern takes a messy new track.

Job market mismatches are a long-term headache

8 September 2021

There are more U.S. vacancies than unemployed people. The post-pandemic reopening is causing temporary staff shortages despite joblessness elsewhere. But it’s also a long-term trend that will pose a tricky problem for central bankers as unemployment and rising wages coincide.

Capital Calls: UK engineer bidding war, Inflation

11 August 2021

Concise views on global finance: U.S. aerospace group TransDigm tries to elbow out rival Parker-Hannifin with a $9.7 bln bid for Meggitt; predicting U.S. consumer prices is proving tricky.

Capital Calls: GM, Hugo Boss, NYT, Frontier tech

4 August 2021

Concise views on global finance: The U.S. automaker finds inflation cuts both ways; the German-listed fashion brand hopes to double sales by 2025; advertising is a bright spot for the New York Times; Zymergen vaporized 75% of its value under four months after a $3 bln IPO.

Fed can’t ignore even fleeting inflation

28 July 2021

The U.S. central bank reiterated its belief that price spikes won't last. Still, polls show consumers worrying, making politicians edgy. Tapering the Fed's bond buying wouldn't directly counter inflation. But it has to happen sometime, and it would give Chair Jay Powell cover.

IMF skims over non-viral risks to global economy

27 July 2021

The emergence of new highly infectious Covid-19 variants could wipe about $4.5 trln off global GDP by 2025, the international lender warned. Its economic update pays less attention to policy missteps, market ructions, or more bankruptcies. Yet these also pose a threat to growth.

Guest view: Investing when inflation is a mystery

23 July 2021

Trying to outguess asset prices on how fast consumer prices will rise is pointless, Gerard O’Reilly, chief investment officer at Dimensional Fund Advisors, says. Better to focus on ways of outpacing or hedging against what’s anticipated by market gauges of inflation expectations.