There is no doubt US headline inflation has moved higher, and is likely to continue to do so in the near-term. However, investors should look beyond the current discussions regarding pricing pressures. The financial markets already appear to be doing so.

In the next several months, there is a very good chance that the US headline inflation rate will be about 6 per cent, which hasn’t happened since December 1990. We think this will be a temporary development, though it is something to be aware of. We believe headline inflation in the US will fall to 4 – 5 per cent by year-end and to 3 per cent or lower in 12 months.