The writer is president of Queens’ College, Cambridge, and an adviser to Allianz and GramercyDespite a sharp decline in US inflation over the past year, the monthly US data release on movement in prices continues to garner significant attention, extending beyond economists and market participants. It shapes perspectives on economic growth prospects, central bank policy and market performance. It also has social and political consequences.

And now the data has sent a warning shot. Last week’s release showed that on an annual basis, headline inflation increased from 3.1 per cent to 3.4 per cent, surpassing the consensus forecast of 3.2 per cent.

After that rate had hit a peak of 9 per cent in 2022, the US economy has led to a generalised fall in consumer price inflation across the advanced world. Surprisingly, this impressive disinflation has not impeded growth or employment. The US economy has continued to outperform internationally, growing almost 5 per cent in the third quarter of 2023 and, according to consensus forecasts, above 2 per cent in the final quarter of the year. Meanwhile, unemployment has remained at a low 3.7 per cent, with impressive monthly job creation and low weekly jobless claims.