This CIO is 'Confident' Inflation Will Fall in 2022

Morningstar Italy editor Valierio Baselli sits down with Columbia Threadneedle Global Deputy CIO William Davies to talk Covid-19, equity markets, and rising inflation

Ollie Smith 20 December, 2021 | 9:05AM
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The deputy global chief investment officer for Columbia Threadneedle has said he is "confident" of an inflation dip next year.

Speaking to Morningstar Italy editor Valerio Baselli last week, William Davies said investors should look for companies that were able to set prices in the market themselves, as opposed to having costs dictated to them.

"We've seen inflation rise further than we would've thought in 2021, and in the US headline inflation is approaching 7%--in the Eurozone headline inflation [is] approaching 5%. Higher than we would've thought," he said.

"However, as we go through 2022, we are confident that we wil start to see inflation fall. That doesn't mean it'll fall immediately--at the very beginning of 2022--but as we go through the year, we expect to see inflation come back down.

"What does this mean for markets? Well, if we look at those companies that are price takers, and are not able to pass on those cost increases that they're seeing with this bout of inflation, then their margins are going to come under pressure. It's going to be extremely important to invest in those companies that we see as price setters [...] actually inflation may not be a bad thing for some of them."

Watch the full video above, where Baselli and Davies discuss the omicron variant, and the impact of the pandemic on equity markets.

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Ollie Smith

Ollie Smith  is editor of Morningstar UK

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