Experts around the world are keeping their eyes on inflation. On Wednesday, the Organization for Economic Cooperation and Development (OECD) reported that energy price hikes boosted average annual inflation across OECD countries to 3.3% in April when compared with March. They say that’s the fastest rate since October 2008. While economists agree there is upward pressure on prices, there no consensus on whether rising inflation is a temporary phenomenon that will fade as economies and consumers adjust to life after the pandemic, or if price rises signal the start of a sustained trend with major implications for workers and companies.

 

CNN Business/Charles Riley
Global inflation hasn’t been this high since 2008

Prices are rising quickly across huge swaths of the developed world, with inflation in countries that belong to the Organization for Economic Cooperation and Development surging in April to the highest rate since 2008.

Energy price hikes boosted average annual inflation across OECD countries to 3.3% in April, compared with 2.4% in March, the Paris-based organization said Wednesday. That’s the fastest rate since October 2008, when the global financial crisis delivered a massive shock to the world economy.

But prices are rising across the world even when volatile food and energy costs are excluded. When those products are omitted from calculations, inflation still jumped from 1.8% in March to 2.4% in April.

The sudden arrival of inflation as economies reboot following the coronavirus pandemic is a major challenge for policymakers around the world. Rising prices are bad news for anyone on a fixed income, and central bankers may be tempted to combat inflation by hiking interest rates or paring back stimulus programs.

Economists agree there is upward pressure on prices. But there is no consensus on whether rising inflation is a temporary phenomenon that will fade as economies and consumers adjust to life after the pandemic, or if price rises signal the start of a sustained trend with major implications for workers and companies.

Prices are rising at different rates across the 38 countries of the OECD, which together account for about 60% of the global economy. In the United States, annual inflation increased to 4.2% in April from 2.6% in March, while Canada’s rate accelerated to 3.4% from 2.2%. Europe saw more modest increases in April, with inflation increasing to 1.6% in the United Kingdom, 2% in Germany, 1.2% in France and 1.1% in Italy.

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Politico/Christopher Cadelago
Biden clings to the possibility of a bipartisan infrastructure breakthrough

The White House continues to see upside to infrastructure negotiations with Republicans, even as the talks run on longer than President Joe Biden initially planned.

The president still has faith in his ability to win over reluctant Senate Republicans and advisers see benefits — reputationally and politically — in working across the aisle.

But Biden and officials insist they aren’t going to let the negotiations go on for very long. The president’s advisers anticipate drawing harder lines in public over what should be in the plan and how to pay for it as Biden prepares to meet with the Senate GOP’s lead negotiator this week. Inside the White House, aides are eyeing other possible avenues to pass the infrastructure bill and are pointing to June 9, when a House committee dives into a surface transportation bill, as a crucial factor in their overall timing.

Whether the divides can be bridged in time still appears improbable. Biden remains firmly opposed to Republican attempts to pay for infrastructure projects by imposing user fees and using leftover funding from his Covid-relief bill and past pandemic packages. Advisers said that Republicans still have to do more to meet the president’s sprawling priorities, including fixing transit systems and veterans hospitals, removing lead pipes and moving to a greener economy through electric vehicles.

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CNBC/Stephanie Landsman
Market bull predicts calmer June but delivers a summer swoon warning

Investors may get relief from volatility this month.

According to CFRA Research’s Sam Stovall, Wall Street just entered a historically calm month.

“June really is sort of a lackluster month in terms of average returns [and] in terms of frequency of advance,” the firm’s chief investment strategist told CNBC’s “Trading Nation” on Tuesday.

But Stovall is urging investors to embrace the dullness. He warns June may set the market up for a July swoon.

For the year, Stovall sees the “zigzag” pattern as the historical market trend most likely to repeat itself this year. His call is tied to the market’s very strong start to the year and jitters surrounding inflation.

“What history says is that these strong starts are typically concluded with favorable finishes,” said Stovall. “In the meantime, however, we do go through a bit of volatility as the market adjusts — trying to figure out whether it should continue with the advance or start to pull back.”

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