Oil glut ahoy
Here's a surprise captain's call for you: global inflation to fall more than expected in 2026.
In fact, it may already be quietly happening given the oil glut.
Yesterday the price of crude oil fell to the lowest level in nearly half a decade at $55.
And there could be more to come here as the US floods the market, and on cautious hopes of a Russia-Ukraine peace deal (given that Russian refinery products could return to the market, adding significantly to supply).
Since crude prices were trading above $80/barrel back in January, this should start to be reflected in lower petrol prices and manufacturing input costs.
We may already be seeing the early signs of a change in conditions.
It was reported today the UK economy saw headline inflation drop unexpectedly from 3.6 per cent to 3.2 per cent in November.
This will allow the Bank of England to cut interest rates by 25 basis points this month.
Meanwhile both Canada saw headline inflation at just 2.2 per cent in November, while the Eurozone also reported lower than expected headline inflation at 2.1 per cent.
Australia looks like a bit of an outlier now with a headline inflation rate of 3.8 per cent.
But we're on a new inflation gauge, and hopefully lower oil prices will now be a helpful factor in pushing inflation back into the target band pretty quickly.
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