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Inflation Should Keep Moderating As Supply Chain Tensions Resolve

GLOBAL

Supply chain issues were one of the reasons why G20 inflation rose above rates not seen since the series began in 1997. But they have been easing for around a year now and signal further downward pressure on headline inflation from this source.

  • The Federal Reserve Bank of New York’s measure of global supply chain pressures fell further in May to -1.56, lowest since November 2008, but then ticked up to -1.2 in June. On a 3-month average basis it is unchanged at a very low level. It is indicating that global inflation pressures should continue to ease over the months ahead.
  • G20 headline CPI inflation eased in May to 5.9% from 6.5% and a peak of 9.5% in September 2022. June is likely to moderate further with US, euro area and non-Japan Asian inflation declining again. Underlying price pressures have been stickier in coming down, thus keeping central banks alert.
G20 CPI y/y% vs NY Fed's global supply chain pressures 3mma

Source: MNI - Market News/Refinitiv

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