Inflation picks up amid April supply shocks, demand falls: IHS Markit


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Global price pressures intensified in April, according to the latest Purchasing Managers’ Index (PMI) data compiled for JPMorgan by S&P Global. The data, based on panels of more than 30,000 companies in 45 countries, showed near-record upward pressure on business costs amid supply chain disruptions and oil price hikes. energy resulting from the war in Ukraine and blockages in China.

However, global economic growth has slowed amid a marked weakening in demand growth, presenting some downside risks to commodity price inflation in the months ahead, but also underscoring risks to the economic growth from tighter monetary policy, IHS Markit said in a press release.

Global price pressures intensified in April, according to the latest Purchasing Managers Index data compiled for JPMorgan by S&P Global. The data, based on panels of more than 30,000 companies in 45 countries, showed near-record upward pressure on business costs amid supply chain disruptions and oil price hikes. energy resulting from the war in Ukraine and blockages in China.

April’s PMI surveys recorded new records for retail price inflation in the US, Eurozone, UK and Brazil. A near-record rate was reported in Japan and the biggest increase since 2013 was seen in India. China, on the other hand, saw average prices drop for the first time since May 2020, but that largely reflects subdued demand under new lockdown measures.

The aggregate global PMI of goods and services selling price inflation has consequently reached a level far exceeding anything recorded before since surveys began collecting data on selling prices in 2009.

The global input cost PMI, which has a longer time series history than the selling price index, also rose further in April. This gauge showed that average input costs in manufacturing and services were rising globally at a pace not seen since the 2008 commodity price shock, and a pace rarely surpassed since the data was released. first available in 1998.

The clear implication of this further acceleration in business cost growth in April is for global consumer price inflation to accelerate in the months ahead, London-based IHS Markit said.

Of particular note is the extent to which service-sector price inflation, which has generally been lower than that of goods during the pandemic, has now nearly matched that of goods. This partly reflects the recent surge in demand for services as economies around the world ease COVID-19 restrictions.

The survey responses point to three main sources of inflationary pressures.

First, commodity prices continued to rise at an accelerated pace in April as pandemic supply disruptions were exacerbated by Russia’s invasion of Ukraine and further lockdowns in China. The number of companies citing higher raw material prices as a factor in rising costs hit a new all-time high, exceeding three times the long-term average.

Second, the spike in energy prices due to the war in Ukraine means that the number of companies reporting that costs have increased due to higher energy bills has exceeded that observed even in 2008, reaching an all-time high of more than six times the long-term average.

Third, difficulties in finding staff and rising costs associated with existing employees have pushed wage pressures upwards. Although down from recent highs, the past few months have seen the strongest upward pressure on business costs from wages since data became available in 2005.

Fibre2Fashion (DS) News Desk

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