Inflation series: Ageing past the tipping point

Long-term trends

The popular consensus seems to have coalesced around the view ageing is deflationary, and the Japanese experience is often the first evidence cited, writes Ed Smith, head of asset allocation research at Rathbones.

But we are not convinced that its lesson is relevant to the rest of the world. Moreover, there is a significant body of research setting out well-reasoned and well-evidenced arguments for the inflationary consequences of ageing.  We believe ageing creates both inflationary and deflationary forces. A permanent change in the age structure of a population — its demography — can alter patterns of consumption, saving and investment. It can also affect the size of the workforce and its skillset, the rate of productivity growth, and the way in which income is distributed between labour and t...