Don’t hold your breath for raging global inflation: Mike Dolan

Don’t hold your breath for raging global inflation: Mike Dolan

If consensus forecasts prove correct, the pace of euro zone deflation should have slowed a notch to 0.2% last month - even as aggregate prices remained negative for the fifth month in a row and match a 5-month slough in 2009. Core inflation rates, excluding food and energy prices, will likely cling to positive territory, even though the meagre 0.4% rate expected remains the lowest on record.Japan and Switzerland have headline and core inflation rates running even more negative than the euro zone.And the new year hardly bodes well for a pickup in prices, with COVID-19 raging, more severe economic lockdowns and potentially vaccine-resistant variants emerging.Oil prices have more than doubled from the depths of the pandemic shock 9 months ago - even if crude remains down more than 20% on this time last year. And the rebound in world food prices puts them about 3% above 12 months ago and near 6-year highs.But this is hardly the stuff of runaway inflation that would have us investing in wheelbarrows to carry the cash.The ECB's survey of professional forecasters in the final quarter of last year assigned more than a 70% probability that inflation remains at or below the ECB's near