Balancing the well-rehearsed bewilderment over the weakness of the wage response to tightening in developed country labour markets, is an, opposite, surprised reaction to the strength and resilience of factory output prices over the past two years. In summary, the lack of wage acceleration is countered by the gains to profits and profit margins embedded in output price inflation. Over the past 3 years, goods producers have worked off a sizeable inventory overhang, itself the legacy of Chinese over-production in 2013-14. The deep discounting required to clear excessive inventories was a major depressant on treaded goods prices in 2014-15.
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