Inflation is finally cooling. But the ghost of sky-high inflation continues to haunt fund managers.The genuine possibility that the peak in global inflation may be behind us started to emerge in the US last month, when data showed the annual rate dropped to 7.1 per cent in November, a decent fall from 7.7 per cent in the previous month and even a little below forecasts.
Certainly, the “old you” from, say, three years ago, would laugh at the suggestion that 7-ish per cent inflation is good for risky assets. But then, “old you” had not been through the mincing machine of 2022 — a year that fund managers of almost all stripes are desperately keen to forget.
That reading marked the slowest rate of inflation in almost a year and meant the pace of consumer price rises had fallen back for two months in a row. It enabled investors to dare to hope that the long nightmare of endlessly soaring inflation and an endlessly hawkish Federal Reserve might finally be coming to an end. In January, data from the eurozone suggested the US inflation figures were not a blip, when its December rate also dropped back into single figures. US figures for December are due out this week.