The return of Inflation

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Please see below the latest ‘Chart of the Week’ from State Street Global Markets.

This week Michael Metcalfe, head of Macro Strategy, discusses how US inflation has returned.

“This year’s recession may be deeper but the reaction of online prices captured by PriceStats* has been very different to the last contraction in 2008. Whilst it previously took two calendar years for the price level to return to pre-Lehman levels, in 2020, it has taken only 120-days. June posted the largest rise (nsa) for the month on record, which suggests that for the moment, inflation is back and deflation risks are minimal; an impressive outcome given the significant dislocations in output and the labour market.”

If you’d like to interview Michael Metcalfe to discuss this further, please contact: ssgsgm@citigatedewerogerson.com

US price level returns to pre-COVID levels

 

 

Source: State Street Global Markets, Bloomberg

*About State Street PriceStats®

PriceStats is a provider of high-frequency global inflation indices and purchasing power parities that offer insights into key macroeconomic variables. The indices are generated using software that scans the underlying code on public websites to capture the full array of products sold by online retailers, including food, beverages, electronics, apparel, furniture, household products, prescription drugs, and over-the-counter medicines. The technology monitors price fluctuations on roughly five million items sold by hundreds of online retailers in more than 70 countries. The PriceStats methodology is grounded in the extensive body of research of Alberto Cavallo and Roberto Rigobon and their Billion Prices Project at MIT. Cavallo and Rigobon have leveraged this research and their expertise in monetary economics to develop the PriceStats indices.

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