Global | Why today’s inflation spike isn’t likely to last

Inflation is picking up across advanced economies (AEs) and emerging markets (EMs), but the data suggests this will again prove temporary. We see no signs of lasting pressures that might turn a temporary spike into a lasting overshoot.

What you will learn:

  • Pandemic-induced QE plus GDP collapses have indeed produced a historic fall in money velocity that has recovered only slightly. 
  • Fiscal policy support for the household sector strongly produced a peculiar jump in disposable income at a time of falling GDP.
  • On the supply side, food prices have raised some alarm, reaching multiyear highs in 2020. But good harvests promise a likely end to this in 2021. 

Topics: Emerging markets, Global, Inflation, Macro Highlights, Heavy Industry, Pandemic