IHS Markit, working with J P Morgan, has indicated this morning that:
Global cost pressures eased in June, according to S&P Global's PMI business survey data, albeit remaining elevated. The survey gauge tracking changes in costs among both manufacturing and service sector companies worldwide fell from 71.5 in May, its highest since July 2008, to a four-month low of 69.3.
The PMI input cost series acts as a useful advance indicator of consumer price inflation, with changes in firms' costs tending to feed through to CPI with a lag of one or more months.
I offer a word of warning: this is a US article, but it is also a global indicator.
The reality is that, as Danny Blanchflower and I have argued, falling consumer confidence will drive inflation down of its own accord. It is apparent that many raw material prices are now falling, with copper a leading indicator of this. The trend of rising prices is already reversing.
I am not saying inflation is over as yet.
Nor am I saying there is no reason for pay rises to correct the damage inflation has caused to working people, because these are needed.
I am saying that there is not a shred of evidence that we need interest rate rises to tackle inflation at this moment and that if we continue to get them this will be continuing evidence of something deeply malicious going on at the Bank of England.
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Agreed. They’re just helping the rentiers benefit from inflation in the economy – that is all.
Do you not understand how the PMI works?
An index of 69.3 does not say that prices are falling!
I never said it did
I said it presaged a fall in prices
So did the article
What was your impediment to noticing?
You say “prices are falling” the article says input costs rising at the slowest rate for four months… that is two different things and what you say is plain wrong.
Did you get beyond the first sentence of what I wrote or what was in the article?
It seems not
The market prices of many commodities (in USD) have been falling from their recent peaks in the last month or so – crude oil, gas, copper, wheat. It remains to be seen if that trend lasts, but those prices have been falling.
Input costs appear to be rising more slowly (as the Shipping Forecast might say) but still rising. That suggests we may have passed the peak of world inflation, but that is a first derivative, and unlikely to drop to zero or become negative.
Retail prices are another thing. We are unlikely to see retail prices fall. Particularly when so much depends on the dollar price of refined oils, but refining is capacity constrained. Particular in Brexit UK, when we have to spend our pounds, and sterling has slid to the bottom end end of its historical range.