Inflation ‘bump’ spooks pumped-up stock markets

Inflation ‘bump’ spooks pumped-up stock markets

Global stock markets — the Saudi Tadawul included — suffered a surge of panic last week on the fear of higher inflation. The main US indices, the S&P 500 and the Nasdaq, lost a couple of percentage points, with the former turning in its worst one-day performance since February. The Riyadh index continued to show the weakness it has displayed since the middle of last month, albeit after a very strong year. I wrote here a couple of weeks ago how I believe inflation is a toothless threat, certainly not a sinister factor as it has been perceived in the past. Despite the recent market wobbles, I’m inclined to stick to that view. A little bit of inflation is a good thing in the aftermath of the economic collapse we saw last year, and only to be expected as the recovery accelerates. Nonetheless, the figure announced for US consumer price inflation in April — a jump of 4.2 percent over the same month last year — was a significant increase, and enough to compound the market jitters. But put that in some perspective. In April 2020, prices were plummeting everywhere around the world as the impact of the pandemic took