Up one day, down the next. The past week and a half has seen a dramatic increase in volatility on the world's stock markets. Investors have been pulled first one way then the other by a series of high-profile company results - some good, some bad - and a confusing set of US macroeconomic data. The market does not know whether it should worry about growth or inflation, or possibly both: "stagflation".

The short answer is that growth has hit a soft patch, and inflationary pressures are increasing, but talk of stagflation is needlessly alarmist. As the upswing matures (in the US, UK and world as a whole) and spare capacity is eaten away, we would expect to see growth slow from above trend rates and inflation start to pick up. This is perfectly normal. What complicates matters is the impact of high oil prices on inflation and consumer spending.