>FLASH ECONOMICS (ECONOMIC RESEARCH)

At what horizon will global inflation return?

There is currently inflation in certain countries with supply side problems, and higher inflation in emerging countries than in large OECD countries because of the convergence of price levels, but no overall (global) inflation despite very rapid growth in the money supply.

For global inflation to return, the following conditions must be met:
− for wage inflation (underlying inflation,) the world must get close to full employment, which will be a very long process due to the magnitude of available labour resources, and the high level of investment;

− for commodity inflation, the pick-up in global growth must bring demand for commodities back towards levels that generate pressure on prices, and this could take at least two or three years, barring a surprise linked to speculative positions.

Only protectionism could cause a faster return of inflation.


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