GDP rises and suddenly everyone’s afraid of the big, bad inflation beast

Investors are obsessed with the idea of soaring prices, but a glance at the past decade shows there is not much to fear

Inflation is the word striking fear into global financial markets, and US data last week was far from reassuring. The world's largest economy reported inflation running at 5% in May, up from 4.2% in April. It is on the move in the UK too, doubling to 1.5% in April, its highest level since the start of the pandemic in March 2020.

From New York and Tokyo to the City of London, traders are obsessed with the likely course of rising prices, and how central banks will react. Economists based in the Square Mile say their clients ask about little else when they demand to know which way the financial wind is blowing.

This century, employers have been shedding white-collar workers, ignoring unions and hiring on short-term contracts