On the face of it, the rise in core inflation in several advanced economies in July seems to challenge the idea that lower demand will dominate lower supply in the tug of war over consumer prices. But we continue to think that spare capacity will keep a lid on underlying price pressures this year and next, and that the main upside risks to inflation are at least a couple of years down the line.

Read the publication Upside inflation risks are mainly a few years away on the Capital Economics Website.

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