Global inflation unlikely to accelerate but upside risks dominate – SCB
Analysts at Skandinaviska Enskilda Banken, note that in most countries, measures of core inflation remain low at around 1.5%, while headline inflation has edged higher to just above 2%.
“Upside risk to our inflation forecast is deteriorating global trade relations that trigger increased protectionism and increased tariffs. So far, there is little to suggest that higher tariffs have been passed on to consumers, but should trade wars escalate and involve more countries this might happen.”
“In contrast, strong competition due to globalisation and e-commerce continue to have a dampening effect on prices and businesses are struggling to pass on higher costs to their customers.”
“We expect inflation to fall to or below 2% in the US, the Euro area and Sweden in 2019 and for it to remain slightly higher in China. This is generally below or at the lower end of the forecast ranges of analysts on Bloomberg. If we are correct and inflation pressures ease or stay at low levels this could trigger a shift in monetary policy expectations in 2019.”