Deutsche Bank-Global Inflation Report Inflation trends US, UK and euro a...-106747611

DeutscheBankEconomicsDateResearch28February2024GlobalInflationGlobalReportInflationtrends:US,UKandeuroareaMarcde-MuizonondivergingpathsbacktotargetSeniorEconomist+44-20-754-77635WedevelopacomparativemacroframeworktoevaluateinflationdynamicsintheUS,euroarea(EA),andUK.Westartwithatop-downviewlookingataggregateSanjayRajademand/supplydynamicstounderstandpricedynamicsatthegranularSeniorEconomistcomponentlevel.Wethentrytoassessthestrengthofmedium-termprice+44-20-754-50530pressuresbyfocusingonlabourmarkets.JustinWeidnernAggregatedemandvssupply.ComparingrealdomesticdemandrelativeEconomisttoQ4-2019withrealGDPasaproxyforaggregatesupply,wefindtheUK+1-212-469-1679haslikelyseenthelargestdemand/supplyimbalance,withnegativesupplyDistributedon:28/02/202411:53:05GMTshocksresultinginexcessdemand.TheUSalsosawelevateddemandrelativetosupply,thoughcomparativelylessthantheUK.TheEAstandsoutwithdomesticdemandgrowingatasignificantlyslowerpacethanaggregatesupply.nUnderlyingpricedynamics.Despitetheglobalinflationsurge,thespreadofpricepressureshasfilteredthroughverydifferentlyacrossgeographiessince2019.Thebiggestsingledriversofinflationwereowner-equivalentrentsintheUS,food&energycommoditiesinEA,whileservicesandcoregoodsintheUKfaroutstrippedtheriseincommodities.Lookingahead,underlyinginflationmetricshavenowconvincinglyturnedinallthreearea...