LONDON (FT) - Key data indicators show that this year’s rampant global inflation has peaked and the pace of core price growth is set to slow in the coming months.
Factory prices, freight rates, commodity prices and inflation expectations are beginning to recede from recent record levels. This data series is widely watched by economists and policy makers because it provides an early indication of the trends that will shape the headline inflation calculation.
According to economists, the numbers indicate that price pressures on global supply chains are easing, making headline inflation likely to ease from the historically high rates that have hit household finance and business activity in recent months.
This would be good news for the leading central banks, which have been rapidly raising interest rates in a concerted effort to tame inflation, threatening to plunge major economies into recession by doing so.
“Inflation is likely to be peaking,” said Mark Zandi, chief economist at Moody’s Analytics. He said the easing of price pressures and supply-delivery bottlenecks “presages the upcoming moderation in consumer prices.”
Global inflation hit a record 12.1 percent in October, Moody’s estimated. Zandi said that would be a “high water mark” for consumer prices.
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Inflation has already peaked across emerging markets, according to Capital Economics, with consumer prices falling in Brazil, Thailand and Chile, while recent data shows easing some price pressures in advanced economies.
All of the leading G20 economies that released their producer price indices for October reported a slower pace of annual growth compared to the previous month, including Spain, Mexico, Portugal and Poland.
Energy and other commodity prices could jump again if the Chinese economy rebounds strongly, or if Russia makes further export cuts in response to oil and gas price caps in the West.
Commodity prices and other indicators that feed into the overall inflation figure are in decline.
The FAO food price index slowed to an annual rise of 1.9 percent in October, down significantly from a peak of 40 percent in May 2021. The benchmark European gas price for the fund of funds was less than 130 euros per MWh, down from a peak amounted to 311 euros. In August most commodity prices are well below their peak.
Global freight rates have largely returned to pre-pandemic levels after increasing more than five times during the lockdowns.