Post by Trivium China

China has spent the last three years fighting deflation. Now it has the opposite problem. The Iran war has delivered an energy price shock that has rippled through China’s economy at rapid speed. But here’s the catch: This is the wrong kind of inflation. Cost-push inflation – driven by a supply shock rather than strengthening demand – compresses margins rather than expanding them, and squeezes household disposable income without improving consumer confidence. In our latest blog post, macro-econ analyst Joe Peissel breaks down what this means for policy options and why this shock is arriving at the worst possible time. Read the full analysis here: https://lnkd.in/eyg7E_hK