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Oil demand trend and inflation

Energy, and particularly oil has been an important component of inflation over the last 18 months. After the #covid19 shock, oil demand plummeted as can be seen in the chart below, and since China never really went back to normal, oil demand never went back to its historical trend. Since ‘86, every time there’s been a recession or an external shock, oil deviated from the trend but went back to it once normalization occurred, perhaps orchestrated by #opec. Today, it hasn’t, at least not yet. And maybe that’s due to China lockdowns and zero Covid policy, which have recently ended. We should expect oil to go back to trend and therefore, have an impact on #cpi over the coming months.

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