The trigger for the next global recession is at last coming into view after a series of loud distractions and false alarms.

The Atlanta Federal Reserve's gauge of "sticky-price" inflation in the US soared to a post-Lehman peak of 3pc in February. This index is a 'pure' measure of core inflation - the underlying story once the noise is stripped out.

The Cleveland's Fed's 'median consumer price index' jumped to 2.9pc, with big rises are in medical services, housing rents, car insurance, restaurants, hotels, women's clothing, jewelry, and car hire. This is the long-feared inflexion point we all forgot about in those halcyon days of deflation, now just a fond memory.

The Fed's veteran vice-chairman Stanley Fischer is itching to tighten. "We may well at present be seeing the first stirrings of an increase in the inflation rate,” he said in a portentous speech last week.

Every major downturn since the First World War has been caused by the Fed, determined to snuff out inflation as the credit cycle matures.  Expansions rarely die of old age. They are killed.

But be careful. John Williams from the San Francisco Fed says that under any definition of the Taylor Rule - used by central banks to calibrate policy and the output gap - there should be an "immediate increase in rates".

It not happening yet because doves first want to see the "whites of the eyes" of coming inflation. That is hardly a comfort. 

David Fuller's view

Here is a PDF of the article.

I recommend that subscribers look at the charts in Ambrose Evans-Pritchard’s article, particularly the fourth one on US core inflation metrics.  I had not seen this before and it contains an overlay picture of five measures of US inflation since the year 2000.

I maintain that commodities will be the best lead indicator for higher inflation which very few people are currently expecting.  The irony might be that just when investors are less concerned about deflation, somewhat higher inflation spooks central bankers and not just at the Fed.  We need to be alert because higher inflation, when it comes, could easily cause another cyclical bear market.