Global inflation update: Disinflation on track – Standard Chartered

Headline and core CPI inflation ease globally; global PPI inflation is approaching negative territory. Inflation indicators such as freight costs, commodity prices show limited signs of inflationary pressures. Inflation remains very well-behaved in Asia, but food inflation continues to be a source of concern, Standard Chartered’s economist Madhur Jha notes.

Food inflation is a worry for Asia

“UST breakevens suggest renewed concerns about US inflationary pressures.  However, on a more global basis, drivers of inflation are still subdued. Supply-chain disruptions remain limited despite the escalation in geopolitical tensions, and orders-to-inventory ratios are easing, suggesting limited inflationary pressures ahead of the holiday season. While recent China stimulus has boosted industrial metal prices, commodity prices overall have been fairly stable. China continues to export deflation, with US import prices from China (and Asia) well below those from other regions.”

“Headline CPI and PPI inflation continue to ease broadly, even in the SSA and MENA economies. Core inflation is also falling across regions, though it remains elevated compared to the pre-pandemic period. This should provide comfort to central banks looking to ease policy rates and support growth. More importantly, the momentum on both CPI and PPI inflation (3M/3M) continues to show signs of broad-based easing.”

“Among Emerging Markets (EM) economies, inflation looks well-behaved in Asia, partly due to fairly stable exchange rates this year. Food inflation, however, continues to be a source of concern for Asia, with both the momentum and annual pace of inflation picking up. A similar trend is also seen in some other EM economies, suggesting potentially a lagged impact of El Niño conditions.”