Widespread weakness in core inflation

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22 July 2010

Commentary from Peter Hall, vice president and chief economist, Export Development Canada (EDC).

Economic rebound, localized capacity constraints and base effects kept global inflation-chatter active in the opening months of this year. In recent weeks, there’s a kind of hush setting in on the topic. Have other issues crowded this one out, or is recent inflation performance telling a deeper story?

Consumer prices have been on a wild ride in the past 30 months. Sharp increases in food and energy prices, together with higher prices for other commodities, sent consumer prices on a one-year rocket ride starting in mid-2007. At the peak, indexes that included all goods were well above central bank inflation targets in most industrialized countries, and although core indexes (those that strip...

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