After a report showed that inflation in China strengthened in January with the consumer price index reaching 2.5 percent y/y and producer price index reaching 6.9 percent y/y, which is the highest in five years, further reports confirmed that the return of inflation is likely to be a global phenomenon.

• German inflation report confirmed 1.9 percent price growth y/y in January, which is well within the target of the European Central Bank (ECB).
• Retail price index (RPI) in the UK jumped to 2.6 percent y/y in January. Producer price index for output rose by 3.5 percent y/y. Weak pound pushed the input cost to rise 20.5 percent y/y. House price index is up 7.2 percent y/y. Compared to the above the rise in consumer price index was small, it rose by 1.8 percent y/y.
• In Switzerland, the economy returned to positive yearly inflation for the first time since 2014. The consumer price rose by 0.3 percent y/y, producer and import prices rose by 0.8 percent y/y.

This rise in inflation is likely to continue for some time now. We expect the increasing price of commodities to support the increasing inflation, especially metals and agriculture.