(Global Stagflation) - '..UK Is ‘Stagflationary Sick Man of Europe’ - '..inflation remains persistent.' - 'Bundesbank lessons .. the 1970s .. inflation.'

'..everyone should take heed of what the Bundesbank, that bastion of orthodoxy, said in its 1973 annual report after the Opec oil shock.

After “a year of hard struggle for more price stability”, it said the success of each country depended on “whether it is made easier or more difficult to pass on the higher prices [of oil]”. Faced with a potential wage price spiral or, as the Bundesbank put it, “the domestic struggle for the distribution of the national income”, it said its aim was “to restrict the scope for passing on the higher prices as far as possible from the monetary angle”. Blunt talk and tough action, but almost alone it succeeded in the 1970s battle against inflation.'

'When wage and price increases become tightly intertwined, the damaging ratchet can be hard to eliminate

..

With core inflation stubbornly hovering around 5 per cent in the US and eurozone, and significantly higher at 7.1 per cent in the UK, all these economies are experiencing an unhealthy wage-price dynamic. Companies raising prices have prompted workers to defend their pay levels and this has put further pressure on businesses to increase prices. It is a damaging ratchet, if not quite a wage-price spiral.

..

..once prices and wages become intertwined, they are hard to separate. And as Professor Wendy Carlin of University College London says, everyone should take heed of what the Bundesbank, that bastion of orthodoxy, said in its 1973 annual report after the Opec oil shock.

After “a year of hard struggle for more price stability”, it said the success of each country depended on “whether it is made easier or more difficult to pass on the higher prices [of oil]”. Faced with a potential wage price spiral or, as the Bundesbank put it, “the domestic struggle for the distribution of the national income”, it said its aim was “to restrict the scope for passing on the higher prices as far as possible from the monetary angle”. Blunt talk and tough action, but almost alone it succeeded in the 1970s battle against inflation.

..central banks need to be certain they have extinguished their wage-price ratchets before taking their foot off the brake. Interest rates will need to stay higher for longer, even if that proves to be too heavy-handed in retrospect.'

- Bundesbank lessons for today’s central bankers, June 22, 2023


'Bank of America Corp. strategists characterized the UK as the “stagflationary sick man of Europe” as they listed reasons why the country is so unappealing to investors.

..

..stagflation — a combination of high prices and economic contraction..'

- BofA Strategist Says UK Is ‘Stagflationary Sick Man of Europe’, June 23, 2023


'The Dutch economy .. underlying core inflation – which does not include price increases for energy and food – will rise to 6.8% this year. This is according to the new Economic Developments and Outlook published by De Nederlandsche Bank (DNB).'

- '..inflation remains persistent,' June 19, 2023



Context

Inflation taking ‘lot longer’ than hoped to come down, Andrew Bailey says, June 14, 2023

(Global Stagflation) - 'IMF Managing Director Kristalina Georgieva emphasized the need to overcome sticky inflation..'

(Global Stagflation) - 'The European economy .. stubborn inflation raises the price of groceries..' - '..Fed .. sticky inflation..'