Inflation is Coming?

Gird your portfolios.  After 6 years of relentless deflationary pressures, there are clear indications that the inflationary worm may be turning.  (Excuse the lazy metaphors).

In the US there are strong signs that the employment market is starting to push inflationary pressures into the wider economy:

The big deflationary pressures from the commodity bust have worked their way through into the economy - with all commodities now trading at or below the marginal cost of production, it is difficult to see further significant deflationary impetus coming from this source.  A slow down in China remains a talking point, but as we have pointed out recently in various presentations, slower growth on the larger Chinese economy now actually provides more real growth than the higher growth rate of 10 years on a much smaller Chinese economy then.

And just to provide a dissenting voice to the "China is slowing thesis", here is Chinese Oil demand over the last 11 years:

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