Global inflation shows signs of cooling down

According to research firm InSpectrum Tech, the price of semiconductors – a measure of the cost of electronic products such as laptops, dishwashers, LED light bulbs or medical devices worldwide – is now only equal to half of the peak reached in July 2018, and down 14% compared to the middle of last year.

Along with that, Green Market’s fertilizer price index shows that prices in North America are 24% below their record high in March. This index is one of the gauges of global food inflation. .

In addition, Drewry Shipping Consultants also recorded a 26% decrease in the container shipping price index since the record in September 2021. The company’s Drewry World Container Index (WCI) measures the biweekly freight rate fluctuations of 40-foot containers across seven major shipping lanes. As of May 31, the average price recorded was $7,600, down sharply from the peak of $10,400.

Inflation has surpassed 8% in the euro area. US data due for release later this week could also be above that level. Many Asian countries are also not out of the trend, prompting central banks around the world to actively find solutions to curb inflation.

As central banks raise interest rates, many economists begin to judge that the peak of inflation has passed. With supply-side pressure easing, central banks can slow down monetary tightening.

Experts said that due to the lag in the production process, consumers have not yet felt the price drop. Some retail giants like Walmart are still struggling to clear inventory, as shoppers become less enthusiastic about rising prices.

According to a new poll from Wall Street Journal and NORC of the University of Chicago, about 83% of Americans said the state of the economy was poor or not very good. This is the highest level of dissatisfaction since 1972 – when NORC – one of the largest independent research organizations in the US – began conducting the poll.

“With inflation yet to peak in some parts of the world, there are at least some signs that we are not too far from the turning point,” said Khoon Goh, Head of Asia Research at ANZ Singapore assessment.

China’s producer prices peaked at the end of 2021 and are starting to correct moderately. Economists expect May ex-works prices to rise 6.5% from a year earlier, but down from 8% in April.

According to Goh, this is promising progress to reduce inflation of imported goods around the world. In addition, the most recent Purchasing Managers’ Index (PMI) also reflects lower container freight rates and improved delivery times, providing the prospect of easing delivery bottlenecks later this year.

Even so, oil prices – another important factor affecting inflation – are forecast to remain high. Yesterday (June 6), Citi Research even raised its fuel price forecast, due to the delay in additional supply from Iran, causing the market to continue to be tense.

Citi Research raised its Brent price forecast for the second quarter by $14 to $113 per barrel. Prices for the third and fourth quarters also increased by $12 to $99 and $85 per barrel, respectively. The bank estimates that Brent will average $75 per barrel in 2023, $16 higher than its previous forecast.

Session An (according to Bloomberg, Reuters)