Drivers of cost-push inflation - used
GLOBAL MARKETS
Transportation costs
AIR: HIGH | SEA: HIGH
UNITED STATES
Wage growth
WAGES: FADING | NOT INFLATIONARY
UNITED STATES
Capacity Utilization
LATEST: LOWER | NOT INFLATIONARY
Insights
CONCEPT
How are production costs influencing inflation? We monitor here: (1) global supply chains via key transportation costs to pick-up any bottlenecks (indexed); emerging wage pressures and productivity gains; (3) industrial capacity utilization. Any stress emerging from those factors will likely raise inflation in the near future.
CURRENT READINGS
- Wage growth in the US is elevated. Falling hourly wage growth is fully explained by the recent increase in hours worked with no expected income on inflation trends.
- Deep Sea freight costs (=shipping by boat) are currently elevated and declining - a welsome sidng of relief.Air freight costs (=urgent shipping by plane) are elevated: air transportation costs remain relatively high and volatile, pointing out to ongoing inflation pressures.
- Finally, at 75.66%, industrial capacity utilization is limited and declining, and remains below the historical limit that anticipates emerging inflation pressures.
MARKET IMPLICATIONS
In light of the above, production activites offer mixed views with some cost-push pressures that could marginally contribute to rising prices.
Remember that inflation is driven by several factors: (1) demand pull factors - too much money chasing too few goods (rising demand for goods & services with shrinking supply) proxied by economic growth; (2) cost push factors analyzed here; (3) changing inflation expectations.