Capital Economic provides us with some research and they sent us an interesting piece on how the resurgence of global inflation is raising fears of a return to the 1970s. They point out that the good news is that, there is little sign of commodity-led inflation becoming embedded in the economy via wage and price-setting behavior. With economic activity weak and labor markets softening, households will find it very hard to secure higher wage increases to compensate for higher prices.

This is good and it should allow the supply and demand responses to eventually bring commodity prices back down to earth.

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Tags: Greg