Ist die weltweit gefallene Inflation ein Grund zur Sorge?

Recorded inflation readings have fallen across a number of developed and emerging markets over recent months, and forward-looking measures of market expectations of inflation have also dropped sharply in recent weeks. This sort of disinflationary impulse is often linked to faltering growth. And for this reason it is typically associated with a derating of equity markets. But this time we have not seen this derating come through. One reason why this has not been the case is because much of the fall in inflation has come from declines in energy and food commodity prices. And these lower input prices have helped prop up profit margins at companies and enabled them to hit earnings targets.

But global disinflation has not all been benign. The deflation that we have seen develop in a number of Eurozone countries is clearly of concern. It is a corrosive element that impedes governments' efforts to rebuild creditworthiness, hurts businesses' ambitions to retain solvency, and tests societies' ability to maintain cohesion during already testing times.

Lastly, the marked devaluation of the yen may serve to export the domestic deflation suffered over the last twenty years by Japan. With global monetary policymakers delivering close to maximum policy looseness the impact of this last disinflationary impulse is yet to be judged as malign or benign.