The debate over whether or not US inflation is transient will boom next week, with Wednesday’s CPI figures giving a mixed picture.
On the one hand, the headline inflation rate could reach over 5.5 percent, its highest rate since January 1991, in part due to higher oil prices.
On the other hand, the rate excluding food and energy could stabilize around 4%. This compares to 4.5% in May. And month-over-month price increases – both for the headline CPI and the core CPI – will be much smaller in recent months than in the spring, suggesting that what we are we saw then was indeed a brief surge in price increases rather than the start. sustained inflation.
Elsewhere, concerns will be about the pace of the recovery. Although official euro area data should show that industrial production recovered in September after the August decline, the picture will be that the recovery is weak and volatile: production is only expected to be around 0. , 5% in the third trimester compared to the second.
The outlook is not good either. The ZEW survey of financial professionals will show that optimism for the German economy has fallen sharply since the spring, in part due to material shortages.
In addition, production will be around 5% below its pre-pandemic peak (which dates back to December 2017) and even further below its 2008 peak. It is a reminder that the region is in stagnation. in the long run – a fact from which the pandemic has distracted us.
We could also receive worrying news from China, with news that the M1 measure of money supply has grown by less than 4% in the past 12 months. This is important because such low growth has in the past been a good main indicator of low production growth in the country and therefore of falling commodity prices. This should be of concern to holders of mining stocks, but to those who are concerned about inflation.
In the UK, the ONS will report that real GDP edged up in September, implying quarterly growth of around 1.4% – although this is well below the 5.5% jump in the second quarter, which means GDP is still 2 percent below its pre-pandemic peak.
The breakdown of the data should show that growth has been driven by an increase in consumer spending on hotels and an increase in capital spending, tempered by an increase in imports and a decrease in inventories. Business investment, however, is still expected to be around 10% below its peak as long ago as in 2016.