Europe’s seeing inflation fade. The UK still has it bad. In Japan, inflation is actually good news.
Europe’s seeing inflation fade. The UK still has it bad. In Japan, inflation is actually good news.
It appears that we’re starting to get inflation under control in this country. But this country isn’t the only place in the world that’s been dealing with rising prices.
Inflation’s been high — and sticky — in a lot of places since the worst of the pandemic.
The eurozone, though, has gotten a bad rap, argued Pierre Lafourcade, senior global economist at UBS Securities. “The narrative is that inflation is running rampant,” he said, “but that’s actually not quite true.”
It fell to 5.5% in June, which is its lowest level since the beginning of last year. “And a lot of that is, of course, because of energy disinflation.”
Next door in the U.K., Lafourcade said, things are not great.
“Right now, the U.K. is experiencing the mother of all inflation shocks across all categories,” he said.
Inflation’s running at around 9%, and lower energy prices are not helping much. EY Chief Economist Gregory Daco said a lot of things are keeping core inflation high: “Brexit increasing the cost of trade, issues regarding health spending and health inflation.”
That’s all while growth is sluggish. “This is the typical stagflationary type of scenario,” Daco said.
Then there’s Japan, where some policymakers are actually happy that inflation has woken up.
Remember that, for years, Japan had virtually no inflation. The country even experienced some deflation, which means “the incentive is to not spend and to wait for prices to fall further,” said Joe Brusuelas, chief economist at RSM.
But now that inflation’s in the 3% range, “it provides an incentive for individuals to spend,” Brusuelas added — and to invest in a way Japan hasn’t seen in three decades.
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