First, the good news: US inflation is down. Now the bad news: US inflation isn’t down by as much as a lot of people were expecting. Cue quite a lot of confusion on the markets. First, the S&P 500 plunged by 0.5 per cent, then it rose by 1 per cent, then it was more or less back to where it started the day. The FTSE100 has performed a similar gyration: first erasing its daily gain and then regaining it, to finish nearly 1.5 per cent up on the day.
So, is it positive or negative news that US consumer inflation has fallen from 8.5 per cent in March to 8.3 per cent in April? Today’s news can be used to support fears that the spike in global inflation is not merely transitory. It will have a long tail, even if oil and gas prices – one of the main drivers of inflation over the past year – have now fallen back a little.
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