Global inflationary pressure has investors demanding government bonds as protection against rising prices.  For nearly nine months, inflation rates have become increasing heavy on the world economy and investors are worried that some governments cannot sustain any strength that is needed for prolonged economic recovery.

Not since 1991, when the European Union first experienced a historically high inflation rate of 5 percent, has the euro zone nations faced another tough inflationary challenge to it economic well being, and for emerging markets like China, India, and Brazil the threat of inflation is also felt.  Globally-speaking, rising prices in food, oil, energy, retail, and raw materials are hindering recovery.  This impact could further cause prices to rise “over the next few years with some warning that inflation could be the world’s next economic pressure point,” as reported by Financial Times.

The risk of inflation typically happens when fast-growing emerging economies struggle to keep up with the pace of consumer prices, but, now well-developed countries- like Great Britain- are facing the risk of inflation as well, leaving investors to decide if the risk outweighs the growth rate. (more…)