Wednesday , December 2 2020
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How hidden is inflation?

Summary:
Come out, come out, wherever you are. Or, if you’re somewhere in lockdown, perhaps not. The pandemic has led to the disappearance of inflation — at least if you look at the official statistics. In the eurozone, prices in the year to October fell by 0.3 per cent; in the US they rose by a paltry 1.2 per cent over the same period. But was inflation merely hiding in plain sight? And if so, where? As we have argued in the past, official measures may be underestimating the degree to which prices for the average consumer are still rising. The reason being that the pandemic has upended our spending habits. Why does that matter? Inflation is calculated using a basket of goods and services said to represent the spending patterns of the typical consumer. What’s included — and the

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Come out, come out, wherever you are. Or, if you’re somewhere in lockdown,...

FT Alphaville
FT Alphaville is a free daily news and commentary service giving finance professionals the information they need, when they need it. In a world where market professionals are inundated with information there is a pressing need to edit and filter, and hopefully sow a few ideas along the way. That’s where the FT Alphaville team comes in.

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