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Citywire North: Inflation will be investors' biggest issue next decade
by Elsa Buchanan on Sep 04, 2013 at 13:01
Inflation will be the single biggest issue investors will face in the next decade, Principalis' Dr Pippa Malmgren has warned.
Speaking at Citywire North - the annual gathering of key regional wealth advisers in Harrogate's Rudding Park - Malmgren warned that while the UK and US economies are healing, inflation remains a risk.
She pointed to Germany, where food inflation is running at three times the official target, and also voiced concerns about the emerging markets where high levels of inflation have historically caused social unrest.
'For us in the markets, it will be the single biggest issue we will face in the next decade,' Malmgren said.
'In Germany, food inflation is now 5.7%. The price of potatoes in Germany is up 44% year-on-year, the price of butter is up over 30%, and the price of peppers is up 45%. These are all individual data points and central bankers will say it's all offset by other things, but the fact is, people feel those prices.'
Malmgren (pictured) also pointed to the difficulties currently being felt in the emerging world, where countries like India have seen their currencies plummet to record lows.
Malmgren said developing economies were no longer the easy play they once were and like the West, they too would also struggle with inflation.
She explained: 'Where currencies are depreciating, inflation is rising. In emerging markets [inflation] raises a very profound question: if I'm not going to get rich before I get old, and now my cost of living is going up, why is all the wealth in my society being distributed to some other guy.'
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