Rapid growth in unit labour costs poses an upside risk to core inflation in many advanced economies. However, firms’ pricing power is weakening and we think that it will continue to do so. As a result, higher labour costs will not be passed on in full and so not prevent inflation returning to about 2% by year-end.
We’ll be discussing the outlook for global inflation in a 20-minute online briefing at 3pm BST/10am EDT on Wednesday 8th May. (Register here.)
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