Shoppers and investors could be hit with higher inflation sooner than they are bargaining for, economists warn.
Inflation across the developed world has been low or non-existent for several years now, but with the U.S. Federal Reserve expected to act soon on interest rates, analysts expect it could take off sooner than forecast.
Stock markets are on tenterhooks ahead of the Fed’s decision on Thursday, when many believe its rate-setting committee under Chair Janet Yellen will raise rates for the first time in more than a decade.
As the west tries gradually to return to normal monetary policy after the global financial crisis, central bankers are trying to emphasize stability and continuity. Many economists agree that the sustained period of low-to-zero inflation is likely to continue.
However, analysts add that the inflation cycle may be hard to control — particularly if commodity prices rebound from their current lows. If consumers take advantage of low oil and food prices, and the consequent extra buying power they have, to get back into the shops, this could also start to push inflation higher, faster.
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