Today's world war on inflation is yielding no winners

Another month, another suspenseful inflation number. India’s 6.8% rise in the Consumer Price Index (CPI) on Tuesday was lower than expected because of slower-rising vegetable prices that however still jumped 26%.

- RAHUL JACOB

The US’s August inflation number released on Wednesday, meanwhile, disrupted the cheery view that the US economy is managing to avoid a recession while inflation does the Federal Reserve’s bidding without needing more interest rate hikes. For stock markets around the world relying on this benign scenario to spin out soft landing narratives and justify higher share prices, we are at a critical juncture. The witty UBS chief strategist Bhanu Baweja has called this “Peak Goldilocks."

Among the bears threatening to spoil this fairytale are Vladimir Putin and Mohammed bin Salman. Russia and Saudi Arabia’s supply cuts have contributed to oil prices heading north of $90 per barrel. The problem for central bankers from the US Federal Reserve to Reserve Bank of India (RBI) is that managing inflation has become a bit like keeping an umbrella handy for extreme weather events. The stress points keep moving around: one year, it is a shortage of containers as the US hoovered up consumer goods, the next it’s a semiconductor-chip shortage that affected auto production globally. Now, it is global oil prices, while in India a bizarre relay-race of rising vegetable, edible oil and cereal prices, seemingly jumping from one category to another, has made inflation a subject for discussion almost as pervasive as politics.