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It's 'Negflation' That Britain Really Needs to Worry About

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AND ANOTHER 'FLATION GETS ADDED TO THE PILE
"Inflationary pressures have remained surprisingly strong right through the downturn, and there is as yet little sign of a let-up," the Telegraph reports. "This is "cost push inflation", rather than "demand pull", but no less damaging to disposable incomes and business confidence for it."

"The policy dilemma facing central banks is often framed in terms of a choice between "deflation" and "inflation". Yet the chief long-term risk is unlikely to be so obviously polarised. Nor is it 1970s-style "stagflation" we have to worry about; few would think the return of double-digit inflation at all likely.

What Western nations may instead be facing requires a new word – say "negflation", defined as static or gently declining real levels of output in combination with higher-than-desirable inflation. Any such combination would pose extreme challenges for policymakers."

SOURCE:   Telegeraph

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