More on inflation

The Economist is running with a leader on inflationary woes today.

In a further article inside, parallels are drawn between developed economies in the 1970s and emerging economies in the 21st century. There may also be problems with measuring inflation accurately in large, increasingly complex and growing economies:

... official figures understate inflationary pressures in many emerging economies. Widespread government subsidies and price controls are one reason, and price indices are often skewed by a lack of data or government cheating. China’s true inflation rate may be higher because the consumer-price index does not properly cover private services. Delays in data collection in India can mean big revisions to inflation: the final number for early March was almost two percentage points higher than the original. The latest wholesale-price inflation rate might therefore be pushed up to 9-10%. If measured correctly, five of the ten biggest emerging economies could have inflation rates of 10% or more by mid-summer. Two-thirds of the world’s population may then be struggling with double-digit inflation.

This is surely further bad news for the UK and similar economies who have relied on competitive prices from emerging economies to keep inflation low even while domestic costs have been rising…..