Global inflation measures continued to decelerate in 1Q23.

Consumer prices have mostly decelerated from their peak growth rates globally. The y/y percent change in the global quarterly aggregate has slowed compared to the prior quarter. On a rate of change basis, prices have slowed sequentially since 3Q22, and 1Q23 was the fastest deceleration since 2Q09.

 

Source: Macrobond. 

Most countries peaked between the end of 2Q22 and start of 4Q22. The United States has decelerated 390 bps from 8.9% in June 2022 to 5.0% in March 2023. The EU has come down 320 bps from 11.5% in October 2022 to 8.3% in March 2023. Germany has decelerated 150 bps from 8.9% in October 2022 to 7.4% in March 2023. The United Kingdom has decelerated by less, falling 100 bps from 11.1% in October 2022 to 10.1% in March 2023.

 

Click image to enlarge.

Click image to enlarge.

 

Source: Macrobond. 

Despite the broad rate of change deceleration, consumer prices remain elevated and major central banks tend to focus on the point-in-time y/y % change, rather than the rate of change. Thus, we have not seen a significant reversal of policy or sentiment in that area yet. We believe the deceleration in consumer prices is a sign of a global consumer demand slowdown as consumers can no longer bear the rise in costs, which will likely have negative implications for global economic activity.

Using the same analysis for producer prices, the global quarterly aggregate has decelerated sequentially since 3Q22. On a rate of change basis, prices have decelerated at their fastest pace on record. This is likely a reflection of a broad deceleration in activity and the result of producers’ inability to pass costs on downstream as consumer spending weakens.

Source: Macrobond. 

While a slowdown in inflation continues to make its way through the global economy, we remain focused on what that could mean for consumer spending and broader economic activity in 2023.

 

The views expressed herein are presented for informational purposes only and are not intended as a recommendation to invest in any particular asset class or security or as a promise of future performance.  The information, opinions, and views contained herein are current only as of the date hereof and are subject to change at any time without prior notice.