Inflation

Zimbabwe takes monetary lunacy to the next level

22 May 2017

The African state suffered hyperinflation in 2007 after paying bills by printing its own currency. A decade on, it is doing so by printing U.S. dollars instead. The idea of conjuring foreign currency from nowhere with the tap of a keyboard sounds too good to be true – and is.

Britain’s joyless job boom is nothing to celebrate

17 May 2017

A record three of every four working-age Britons is employed. But prices are rising faster than wages, and a post-Brexit crackdown on immigration threatens to limit further expansions in the workforce. That makes declining productivity an even bigger cause for alarm.

Tesco customer-first strategy will chafe investors

12 Apr 2017

The grocer had its first full year of like-for-like UK sales growth in seven years. Boss Dave Lewis hopes to shield shoppers from rising prices, but not crush suppliers. The risk is that he has to fund that plan with the spoils of Tesco’s $4.6 bln purchase of wholesaler Booker.

Markets can ease Bank of England inflation dilemma

21 Mar 2017

Prices rose 2.3 pct in February, surpassing the central bank’s target for the first time since 2013. Market rates and sterling rose. This tightening in monetary conditions might allow Governor Mark Carney to defer a hike in official rates until the economic outlook is clearer.

Draghi is tugged towards tricky end of ECB easing

9 Mar 2017

The European Central Bank boss sees less need for more stimulus. It’s hard to say otherwise when inflation is on target and likely to stay near there. Yet Europe’s fragile economy makes ending asset purchases a treacherous task that he will want to postpone as long as possible.

Australia stares down its troublesome twins

8 Mar 2017

The central bank is on hold. But present inaction brushes off future uncertainty. Stubbornly low inflation argues for even lower interest rates, while a bubbly housing market cries out for tighter policy. At least rising U.S. rates should put helpful downward pressure on the currency.

U.S. consumers offer better prop for stock market

15 Feb 2017

American retail sales jumped in January while consumer prices rose at their fastest rate in four years, reflecting solid growth. Optimism about Donald Trump’s economic plans has lifted markets. Sound economic fundamentals are more reliable than the dysfunctional White House.

Euro zone revival carries sting in tail

4 Jan 2017

After years in the doldrums, increased business activity and slightly rising prices are good news for the single currency area. Besides, inflation is still a long way below the European Central Bank target. But a sustained pickup would expose the euro zone's two-speed recovery.

Dollar strength spells more U.S. bond weakness

30 Nov 2016

As emerging market currencies wilt against a resurgent greenback, countries like India are dipping into their war chests to sell dollars. More may have to follow suit. Sooner or later, this will involve selling Treasuries. It’s more bad news for the battered U.S. bond market.

Markets’ 1980s revival looks a flawed throwback

25 Nov 2016

The prospect of tax cuts and higher interest rates in America invite comparison with the era of Ronald Reagan and Paul Volcker. U.S. bond yields and the dollar have started soaring, as they did then. But the threat of protectionism makes history an unreliable guide to the future.

Brexit divergence puts Bank of England in a bind

3 Nov 2016

The pound has fallen as investors brace for the economic pain of Britain’s exit from the EU. Meanwhile consumers are behaving as if nothing has changed. Rising prices will squeeze spending, leaving BoE Governor Mark Carney trapped between slower growth and higher inflation.

Inflation is next nerve-jangler for investors

18 Oct 2016

After years of undershooting price targets, some rate-setters, including Mark Carney in Britain, are now talking about tolerating overshoots. Equity winners will vary depending on whether inflation is of the good or bad variety. But global bonds are losers either way.

Inflation shows up at wrong time for Mark Carney

18 Oct 2016

UK consumer prices are rising at their fastest pace in nearly two years. It should be a proud moment for the Bank of England chief, who has been struggling to achieve exactly this. Unfortunately, the pound’s fall is going to give him a bit too much of what he wanted.

Fed governor’s rate view helps her Treasury pitch

13 Sep 2016

Lael Brainard struck a dovish note on interest rates ahead of the central bank’s next meeting. She’s also a leading candidate to be Treasury secretary in a Clinton administration. Her soothing words could help mollify progressives suspicious of her past role in trade deals.

Chancellor: No hyperinflation, just Weimar malaise

13 Sep 2016

Central-bank money printing hasn't produced the spiralling prices that plagued the Weimar Republic. It has, though, delivered some of the social disquiet of 1920s Germany. Policymakers urging more extreme monetary actions need to exercise caution lest they get what they wish for.

UK economy tiptoes down predictably gloomy path

20 Jul 2016

A new Bank of England report hints at rising prices, risks to investment and delayed hiring plans since Britain voted to leave the EU. Even more worrying, there are reports that demand for loans is easing. This medley of problems wasn't hard to forecast, but is hard to fix.

Russian retailers can expand but they can’t hide

2 Jun 2016

A devalued rouble and deep recession have hit Russian shoppers. More are going to open-air markets for bargains instead of Western-style retail chains. To compensate for less spending per capita, the big supermarkets are building in every place they can reach.