Best Financial Markets Analysis Article Whilst the United States has experienced real year on year price deflation during 2009 as illustrated by the comparative CPI indices below, however key elements of the in-depth analysis for UK CPI inflation of 27th December 09 can also be applied to U.S. inflation expectations that converge towards 2010 being a year of inflation for both countries with UK inflation to breaking above 3% early 2009 and staying above 3% for most of the year which was confirmed by today's UK Inflation data that showed CPI soar by 1% in one month to rise from 1.9% to 2.9% as the below graph illustrates.

The conclusion and forecast for UK inflation on the basis of the analysis points listed below is for UK Inflation to spike higher early 2010 to above 3% (from 1.9%) and remain above 3% for most of the year only falling to a target of 2.7% by the end of the year.

Inflation Forecast 2009
The Inflation Mega-trend
UK Retail Sales Signal Debt Fuelled Election Consumer Boom
M4 Money Supply Adjusted for the Velocity of Money
UK Unemployment
Debt Fuelled Economic Recovery Heading for Double Dip Recession?
Debt and Liabilities
UK Interest Rate Being Kept Artificially Low For Bank Profiteering
UK House Prices Continue 2010 Government Debt Fuelled Election Bounce
UK Producer Prices
Stocks Bull Market Signaling Strong Economy
British Pound to Wobble Lower During 2010

U.S. CPI Inflation Forecast 2010

I have received a number of email requests to conduct a similar analysis for U.S. inflation, unfortunately I do not have the time to conduct the necessary in depth analysis for the U.S. economy and therefore I can only extrapolate a trend for U.S. inflation by taking account of the comparatively less inflationary pressures in the U.S. than for the U.K. as a consequence of LESS Q.E. in the US and a significantly higher U.S. unemployment rate which translates into greater spare capacity and thus generates the following forecast graph for U.S. Inflation, which despite being probably less accurate than for UK inflation, it does however present a road map trend for U.S. Inflation that suggests:

U.S. CPI Inflation 2010 Forecast to just break above 3% in April / May 2010 and then trend lower into the end of the year to target 2.1%.

This projection is amidst an ongoing inflation / deflation debate in the U.S. that clearly is resolving towards INFLATION during 2010 rather than DEFLATION which my earlier analysis suggested would come to transpire over the coming year (16 Dec 2009 - The Inflation Mega-trend and the Illusion of Price Deflation). Which is basically summed up by the fact that virtually all of the worlds economies are swimming in an ocean of inflation washed over by the occasional waves of Deflation as the below graphs for U.S. and UK CPI Inflation indices illustrate.

Thus it will be interesting to see how perma-deflationists explain away real in your face year on year CPI inflation, though given the strong belief in the myth of deflation, I assume some obscure dataset will be conjured out of thin air to continue to hang onto the deflationary point of view, despite real and persistent inflation over the coming 12 months which is inline with the clear inflation mega-trend. To ensure you receive my full analysis, including my NEW inflation mega-trend ebook due to be completed within a week, ensure you are subscribed to my always free newsletter.

Source : http://www.marketoracle.co.uk/Article16610.html

By Nadeem Walayat
http://www.marketoracle.co.uk

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market . Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

Comments

Post Comment (Moderated)

Subject:

Name:

E-mail address (will not be published):

Comment:

(Note Commenting Issue: If after Submitting you are returned to the Main Index Page then due to site caching your comment has not been accepted. Solution - Click the Browser Back Button to the article page and Press PAGE REFRESH (you should see the message "You are not authorized to carry out this operation") Now re-enter your comment (ignoring the notice) - If all's well then you will remain on the article page after submitting, a moderator will check and authorise the comment. Alternatively EMAIL to comments @ marketoracle.co.uk , quoting the article number.

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2010 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.