Lower energy prices will delay rebound in inflation

Our key theme for this year, that the two big deflationary shocks of 2015 - the slump in energy prices and the surge in the dollar - will fade, leaving rising domestic price pressures to generate a rebound in inflation has had a particularly inauspicious start to the year. Energy prices have continued to plummet, while the dollar is still strengthening, most recently against the Chinese renminbi. But we think it's a little early to throw the whole thesis out and join everyone else in wringing our hands about the risk of a global deflationary slump triggered by a collapse in China's economy.