01 Mar 2023 1 min read

Chart of the month: price pressure persists

By Ben Bennett

Sticky inflation makes more aggressive US rate hikes more likely, limiting the chances of a soft landing.


At the beginning of the year, hope grew that the US economy could be coming in for a soft landing – consumer data was strong, and inflation looked to be falling rapidly.

But we’ve recently had a few signals that activity is stalling, with data revisions now pointing to more price pressure at the end of the year. As you can see in the chart, service sector inflation looks particularly sticky.

Under such circumstances, consumer strength is actually a headache for the US Federal Reserve (Fed). How is the Fed going to get prices to stop rising when everyone is out spending money? The answer could be more aggressive rate hikes and a narrower path to a soft landing.

And if 2022 taught us anything, it was that’s not a good backdrop for markets.

Ben Bennett

Head of Investment Strategy, Asia

Ben focuses on investment ideas and themes. He spends a lot of time on the 4Ds of fixed income investing: debt, deficits, demographics and deflation. This might be more than a little influenced by his first-hand experience of a credit crisis, having joined us from Lehman Brothers in 2008.

Ben Bennett