JPM economists Joseph Lupton and Bruce......>

US VIEW: JPM economists Joseph Lupton and Bruce Kasman noted "global inflation

has surprised to the downside this year." They said that "much owes to the

food/energy dip that is now reversing", and added that "core inflation to drift

gradually higher due to tight labor markets and firming goods pricing power."

- They said that "growth and inflation both have moved higher since mid-2016,

but their paths have varied somewhat. The pickup in growth has been steady and

has consistently surprised to the upside. The move higher in inflation has been

choppier and shallower than expected, largely as a result of a surprising dip in

2Q17 (Figure 1). Indeed, global CPI inflation tracked 1.6%oya at midyear, more

than 0.5%-pt below our expectation at the start of the year."

- "While it is inadvisable to over-interpret quarterly moves, the recent

juxtaposition of falling inflation and accelerating growth has called into

question the historical linkages between growth and inflation," they said.