Inspiration & knowledge
Investor Blog
Chart of the week: inflation in US expected
Written by Christopher Dembik | 3 minutesThe supply shock related to the coronavirus is not yet visible, but could considerably impact inflation expectations in the coming weeks and months. Due to changes in aggregate supply, that have not been priced in yet, the risk is growing that food inflation will temporarily rise. We have seen that governments are not cooperating to ensure that global food supply chains continue to work properly. On the contrary, over the past few days, some of the world’s largest food producer countries have announced strict protectionist measures to secure their domestic food supplies (such as Kazakhstan who banned exports of wheat flour or Serbia who stopped exports of sunflower oil).
If we look at rice, which is the staple food of more than half of the world’s population, the risk of supply shortage is increasing rapidly. The main world producer, India, is under three-week lockdown, the second world producer, Thailand, is also under lockdown and has faced severe drought this year that affected its production, and the third world producer, Vietnam, has initiated emergency food security and temporarily suspended new rice export contracts. Even in a deflationary world, all these supply chain disruptions, which are exacerbated by logistical hurdles, can be very inflationary. Adding to that recession and a major increase in unemployment, we have a powerful cocktail for stagflation.

Click here for micro chart mania
Author
Christopher Dembik is Head of Macroeconomic Analysis at Saxo Bank. He is also a member of the Polish economic thinktank CASE (Center for Social and Economic Research) and an advisor to French MPs.
As Head of Macroeconomic Analysis, he delivers reports into global monetary policies and macroeconomic developments to institutional and high-net-worth retail clients located in Europe and MENA.
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Agenda
Date | Subject | Place |
---|
Weekly updates with Kaspar & Martin
Start investing
Investing with Saxo Bank allows you the use of user-friendly platforms and access to all relevant stock markets. Besides we provide you with inspiration and knowledge via the Investment Academy.