Inflation trends diverging among advanced economies, Citi says

Inflation trends among the world's advanced economies are diverging, with upside and downside risks now possibly balanced, at least in the case of the US, economists at Citi believed.

Price pressures had increased in the UK and US, although the latter accounted for the bulk of the increase in advanced economy inflation, Ebrahim Rahbari said in a research note sent to clients.

In parallel, inflation in Europe and Japan remained low, the broker said.

The drivers behind the modest rise seen in inflation were likely past declines in AE unemployment rates and the fading effect of the large falls in energy prices, according to Rahbari.

Changes in foreign exchange rates were partly to explain for the dispersal in inflation trajectories observed across countries.

A potential downturn in growth and a fall in expectations were the main downside risks to inflation, the economist concluded.