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Commodity Deflation In Metals, But Not Energy Or Food

GLOBAL

Global commodity price inflation continues to show signs of having peaked in early-to-mid 2022. U.S. inflation expectations have largely followed the same trajectory.

  • But Y/Y drops in commodity prices are confined largely to industrial and precious metals, which have respectively been negatively impacted by weakening global industrial activity and the soaring US dollar.
  • Global energy and food prices - which have been disproportionately impacted by the Russia-Ukraine War - are broadly up 10 to 30% above year-ago levels. U.S. retail gasoline prices are shown alongside this to show feed-through to consumer prices.
  • And the below represents prices in USD - with dollar strength a key theme this year, foreign buyers are paying more in local currency for imported commodities. For instance, priced in Euros, the Energy index is up 48% Y/Y, vs 26% in USD terms.
  • While that's still well below the peak, and lower metals prices could help pipeline price pressures on the margin, headline consumer prices are set to remain elevated Y/Y through the end of 2022 at current levels.


Source: BBG Commodity Indices, AAA, Federal Reserve, MNI

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