Another False Alarm on US Inflation

Gavyn Davies:

Another false alarm on US inflation?, by Gavyn Davies: There have been a few false alarms about a possible upsurge in inflation in the US in the past few years... There is an entrenched belief among some observers that the huge rise in central bank balance sheets must eventually leak into consumer prices, and they have not been deterred by the lack of evidence in their favour so far.

Another such scare has been brewing recently. ... As so often in the past, this happened because of temporary spikes in commodity prices, especially oil. But these have usually been reversed before a generalised inflation process has been triggered. ....

It now seems probable that part of the recent jump in core inflation was just a random fluctuation in the data. There have been suggestions that seasonal adjustment may have been awry in the spring.

But the main reason for the lack of concern is that wage pressures in the economy have remained stable, on virtually all the relevant measures. ...

On today’s evidence, there has been yet another false alarm on US inflation.