Friday, 26 August 2011

Global economy still seeing inflation for now

Japan released data on consumer prices today showing that inflation moved into positive territory in July and confirming that the global economy continues to see inflationary pressure.

Japan's Statistics Bureau reported today that consumer prices in Japan rose 0.2 percent in July when compared to a year ago. Compared to June, prices were unchanged.

The July annual inflation reading was the first positive one for Japan since January 2009.

The Japanese data completed the picture of inflation around the world either holding steady or accelerating in July.

In the United States, consumer prices rose 3.6 percent in July from a year earlier, the same rate as in June.

In China, consumer prices were up 6.5 percent in July from a year earlier, accelerating from 6.4 percent in June.

In the United Kingdom, the July inflation rate was 4.4 percent, up from 4.2 percent in June.

The euro area diverged from the other major economies, with the inflation rate in July falling to 2.5 percent from 2.7 percent in June.

So inflation definitely persists around the world today.

However, recent data indicate that recession risks are also rising (see “Markets decline, recession coming?” and “Chicago Fed index improves but outlook less encouraging”). If we get a recession, things could change very quickly, as in 2008/2009.

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