The increasingly widespread and marked weakening of global growth threatens to kill ainflation already dead. For this death, as is known, there are many suspects and suspects, but no one has yet been framed with solid evidence. So the central bank research centers are still investigating and racking their brains to unravel the frustrating mess why so much money, and never in history at such a low cost, does not drive up consumer prices.
THElast busillis Mario Draghi has indicated it: wages are increasing but the higher hourly labor cost (+2,7% per annum in the euro area in the second quarter; +2,9% per annum hourly wages in the USA in September) does not translate into price list increases. The solution can be found in the reduced market power of businesses, pressed by hyper-competition of a global and technological nature.
Una hypercompetition which has become angry in recent months, because many companies, especially manufacturing ones, are even cutting price lists to try to support demand, dispose of stocks and keep up with the drop in orders, especially from abroad. Thus, globally, prices remain unchanged (PMI compound index of output prices at 50,4 in September, those of input at 51,9). Even at the cost of further penalizing i margini in the presence of cost increases, not just labor. Not infrequently, in fact, these increases are due to duties introduced which, through the dense network of global value chains, have wide-ranging repercussions.
Thus, any sign of resuscitation could immediately go out and reappear specter of deflation, always looming when the annual trend does not deviate much from zero. Some faint signIndeed, there has been an awakening. For example, the dynamics of prices core in USA it rose to 2,4% in August, a pinpoint post-crisis high; it was under 1% in 2010. In September the same measure in the euro area it reached 1,2%.
In Italy la core has «accelerated» (Istat's word) from 0,5% to 0,6% per year (unchanged at 0,6% in the harmonized index), while the total remained unchanged at 0,4% (it fell from + 0,5% to +0,3% in the harmonized). Therefore, no matter how little they increase, nominal wages manage to replenish (always slightly) the purchasing power of families. In the second quarter the cost of labor in the entire economy it rose by 1,1% per annum (+2,0% in manufacturing) but the wage bill by 1,4% (2,6%), while inflation was at 0,8%.
A further downward push on inflation will come from energy prices. Now that the upward pressure from the military attack on the Saudi crude oil processing plant has subsided, the price of the Petroleum it fell well below the $60 level, i.e. where it was at the end of 2017. And this despite the supply quota set by OPEC and allies and the return of sanctions against Iran. On the other hand theUS extraction it exceeded 12,5 million barrels per day, almost three more than less than two years ago. This abundance of black gold is also among the suspects of who killed inflation.
