So, is the post-Covid inflation panic over? That is how it looked last month, when the government’s preferred inflation index, CPIH, fell to 2.1 per cent from 2.4 per cent a month earlier. We will have the latest news on Wednesday morning, but for the moment it appears that consumer prices inflation hasn’t taken off like we feared. It is a similar story in the US, where inflation fell back from 5.6 per cent in July to 5.3 per cent in August.
The fact that house prices have risen so strongly throughout the deepest recession in modern times ought to be a warning sign
Yet there are good reasons to suspect that the summer slowdown in inflation is a lull and that a rebound is coming. Just look at US producer prices, which ratcheted up to 8.3 per cent in August, up from 7.8 percent in July. That is a leading indicator, which feeds into consumer prices a little further down the line.
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