The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Monday, January 17, 2011

Headline inflation pressures rising around the world--will core CPI follow?

Some evidence that the world may be shifting into more of a (headline) inflationary cycle with the latest data flows. Core inflation still seems benign, but the question is: will it follow? We know that there are also mounting inflation problems in China, India and possibly the UK. This is no surprise given the radical reduction in policy rates during the GFC, with the RBA--pushed along by Board member Professor Warwick McKibbin--one of the few near-zero interest rate policy (NZIRP) hold-outs. UBS summarises the latest data this morning:

* US: The CPI rose 0.5% in Dec (cons 0.4%, UBSe 0.5%) mainly on higher energy costs (after 0.1%) - rising to 1.5% y/y from 1.1%. Core prices rose +0.1% (cons & UBSe 0.1%) again - rising holding 0.8% y/y.

* EU: Inflation for the December final print rose 0.6% m/m and 2.2% y/y
- the highest level since October 2008.

* UK: PPI rose in December to 4.2% y/y (mkt: 3.9%), after 4.1% y/y. Core PPI eased to 2.9% y/y (mkt: 3.0%), from 3.3% y/y.
at 7:36 AM