Sticky inflation will have major implications

MACROECONOMIC FOCUS

SLI's Jason Hepner considers the implications inflation has on asset allocation.

Investors are presently scratching their heads trying to understand why UK inflation is so ‘sticky’ at levels above the MPC’s normal comfort zone. It is apt, however, to consider there are many countries across the world where inflation is clearly on the rise. Major emerging markets that are suffering from this problem include China and India. This trend will have major implications for investors and their asset allocation into 2011. Commodity prices One obvious cause of inflation is commodity prices. Relatively strong global growth, led by emerging markets, causes demand for commod...