While there are many factors driving the macro backdrop, inflation must be quite high on the ‘most important’ list. High inflation means that central banks will hike rates to help cool it down even at the risk of a ‘hard landing’. Hard landings are not good for equity or credit markets. If inflation is largely driven by higher commodity prices, then the question is: will raising rates to fight it even help?
Energy has seen by far the biggest growth, but only makes up 8.3% of the basket. Although energy is also an input to many other categories in the basket. The starting point one year ago, April 2021, was in the middle of the pandemic which is a low base to start from.
The next biggest growth category is Food, influenced by disruption to global supply chains, energy (again) and higher agricultural commodity prices.
Read the full blog post now at the link below