Rising energy prices are pushing inflation higher in Europe and the United States, while energy’s contribution is slightly negative in Japan. Over recent months (3m/3m), core indices have been firming in the euro area and Japan: a signal to watch. In Europe and Japan, pressure on producer prices is building. The risk of the energy shock spilling over to other CPI items is increasing. Markets (swaps) are pricing this rise in inflation into short-term measures. Long-term expectations (5y5y) are rising in Japan and the UK.
