What could lead to inflation coming back in the United States and the euro zone?

- "Before looking at the ways in which the risk of inflation can be hedged in investors’ portfolios, we need to consider whether inflation can come back (we look at the United States and the euro zone) and what might be the causes of a comeback by inflation. In principle the following possible causes can be reviewed:
• domestic wage costs in the United States and the euro zone;
• the robust growth of the money supply (of central bank money);
• inflation imported from emerging countries;
• the rise in commodity prices;
• the exchange rate’s depreciation;
• population ageing."
- "We examine these different causes one after the other:
• unit wage costs are declining;
• there has not been a lasting link after the crisis between monetary policy and inflation;
• emerging countries are not exporting any inflation;
• commodity prices will likely surge from the late 2010s onwards;
• there might be slightly higher imported inflation in the United States;
• population ageing is not necessarily inflationary, and can even be deflationary as we saw in Japan."
- "All in all, the only cause of inflation, from the late 2010s onwards, should be a rise in commodity prices."

Natixis Flash Economics 411 20100825