'Inflation' to be the summer barbeque topic

<p>Kia ora,</p><p>Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news – forget about house prices, we are all about to be obsessed with angst about inflation.</p><p>First we should note that over the course of this coming week the central bank news will be relentless. Final 2021 review meetings are being held at the US Fed, The Bank of Japan, the ECB, and in Switzerland, England, Norway and Mexico. All are facing inflation issues, and all need to set new defenses against that, a threat many in their countries have forgotten how corrosive it can me. But all also face huge public debt for which 'financial repression' is the standard playbook solution. Their judgements will be watched with interest.</p><p>Clearly, both supply and demand issues are occurring at the same time, and that means these policy makers face a unique set of policy circumstances their forebears didn't. If earlier times it was one or the bother; now its both. One thing seems certain; faster tapering by the US Fed.</p><p>American <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank"><strong>consumer price inflation</strong></a> came in at the expected 6.8% year-on-year in November, and up from 6.2% in October. Their core inflation level also didn't surprise with a 4.9% rate compared to 4.6% in October. The main driver was energy costs, and the impact of these may fall away soon as crude oil's gains seem to have settled down. But other elements are rising faster too with food prices up a concerning 6.1%, clothing and apparel up 5.0%, rent up 3.8% and new car costs up 11%. Oddly, medical care costs have only changed minorly over the past year.</p><p>And we should note that the <a href="https://www.nytimes.com/live/2021/12/12/us/tornadoes-kentucky-illinois" target="_blank"><strong>widespread tornado damage</strong></a> through the US Midwest will, temporarily