Why inflation is making a comeback

Inflation has been held down across the world as global manufacturing has shifted to take advantage of low labour costs in China. This has resulted in historically low interest rates, encouraging consumers to push up the prices of assets from buy-to-let flats to Picasso paintings, says MoneyWeek editor Merryn Somerset Webb. But now inflation is making a comeback - and recent stockmarket turmoil could just be a taster of things to come...

What's the connection between the price of a Picasso and the cost of a day's labour in China? This might sound like a trick question but it has a very simple answer - inflation.

For the past decade or so the cost of getting anything made in China has not only been low but getting lower, which has allowed retailers in the West to cut their prices to levels that would have been unimaginable a few years ago.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.