Inflation accelerates amid Apr supply shocks, demand wanes: IHS Markit

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

April's PMI surveys saw new records set for selling price inflation in the United States, eurozone, the United Kingdom and Brazil. A near-record rate was reported in Japan and the strongest rise since 2013 seen in India. China, in contrast, saw average prices lowered for the first time since May 2020, but this largely reflected subdued demand amid new lockdown measures.

The aggregated global PMI index of selling prices inflation across goods and services consequently hit a level far exceeding anything previously recorded since the surveys began collecting selling price data in 2009.

The global PMI's index of input costs, which has a longer time series history than the selling price index, also rose further in April. This gauge showed average input costs across manufacturing and services rising globally at a rate not witnessed since the commodity price shock of 2008, and a rate rarely exceeded since data were first available in 1998.

The clear implication of this further acceleration in growth of firms' costs in April is one of global consumer price inflation likely accelerating further in the coming months, London-based IHS Markit said.

Of particular note was the extent to which service sector price inflation, which has generally lagged that of goods during the pandemic, has now almost matched that of goods. This in part reflects the recent surge in demand for services as economies around the world loosen COVID-19 restrictions.

The survey responses highlight three main sources of inflationary pressures.

First, raw material prices continued to rise at an increased rate in April as pandemic supply disruptions were exacerbated by Russia's invasion of Ukraine and new lockdowns in China. The number of companies reporting higher raw material prices as a factor behind rising costs hit a new all-time high, running over three times the long run average.

Second, soaring energy prices due to the Ukraine war meant the number of firms reporting costs to have risen on the back of higher energy bills exceeded that seen even in 2008, running at an unprecedented level of over six times the long-run average.

Third, difficulties finding staff and rising costs associated with existing employees pushed wage pressures higher. Although down from recent highs, recent months have seen the strongest upward pressure on firms' costs from wages seen since these data were available in 2005.

Fibre2Fashion News Desk (DS)