Inflation Fears

Posted by admin on January 9, 2011 · Leave a Comment

By Yiannis G. Mostrous from Investments daily (Emerging Markets)

A little over a month ago I predicted that rising inflation in Asia would not derail the region’s economic growth (See Emerging Markets Speculator November 18, 2010 issue–Will Inflation Derail Asian Growth?) More recently there have been concerns that inflation could now threaten the anemic but sustainable recovery of the US economy.

The theory underpinning this view is fairly straightforward: Rising oil prices will choke the US recovery by diminishing the consumer’s spending power. It’s a perennial argument for naysayers and one that’s trotted out even when the economy is actually performing quite well.