Talking about inflation

Daily update

On Friday, US President Trump announced that the Department of Justice would investigate (foreign) meatpackers’ pricing. Trump also complained about health insurance costs over the weekend. There seems to be a heightened concern about inflation within the US administration.
The Federal Reserve is unlikely to worry about relative price changes caused by supply issues—beef prices in the US have risen roughly the same as those in the EU, and less than those in the UK. The Fed will also regard the direct impact of tariffs on prices as a one-off. However, second-round effects, especially any evidence of profit-led inflation, would encourage the Fed to be more cautious on policy.
There is a possibility that the US may return to some kind of government before too long. A procedural vote is expected in the Senate that could mark a compromise. Normally when shutdowns end, the economy bounces back to compensate for the drag on growth in the shutdown, though this time there may be more lingering damage.
China’s consumer price inflation unexpectedly turned positive last month. This is however an entirely local concern, and does not have any international consequence. Producer prices remain in deflation, but these are also largely a local issue.