Three of the main supply-side factors driving current global inflation levels have already reversed, meaning there could be relief on the horizon for shoppers around the world.
A semiconductor price — a barometer of the cost of finished electronic products as diverse as laptops, dishwashers, LED lights and medical devices shipped worldwide — is now halfway from its July 2018 peak and down 14% compared to the middle of last year.
The spot rate for shipping containers – which tells us more about the spending we can expect later in the pipeline on clothing in Chicago, luxury goods in Singapore or home furnishings in Europe – has fallen 26% since its high in September 2021.
Fertilizer prices in North America – an indicator of where global food inflation is headed, including bills for tomatoes in London or onions for sale in a Johannesburg market – are 24% below their March record high.
With euro area inflation now above 8%, and expected to remain above that level in the US when May data comes out on Friday and also on the rise in Asia, central bankers around the world are struggling to keep it in check. to keep it under control.
Even as central bankers raise interest rates, more economists are rallying around the idea that peak inflation is behind us — although there will be a slowdown before the lower cost of commodities seeps into the prices shoppers are seeing.
While few near-term forecasters predict a return to pre-pandemic prices, global retail giants like Walmart Inc. now to send inflated supplies to a less enthusiastic customer. So a moderation of those supply-side pressures could eventually allow central bankers to slow their tightening cycles.
“While inflation has not yet peaked in some parts of the world, there are at least some signs that we may not be too far off in terms of a turning point where we begin to see annual inflation fall,” says Khoon Goh. , head of Asia research in Singapore at Australia & New Zealand Banking Group.
Chinese producer prices peaked in late 2021 and are beginning to moderate. Economists predict a 6.5% increase in factory prices in May from a year earlier, from 8% in April.
That is a promising development for easing the inflation of imported goods worldwide, Goh said. In addition, lower container freight rates and better supplier lead times in purchasing managers’ indexes point to a reduction in bottlenecks that should curb price pressures later this year, he said.