Late last year growth and inflation were jointly on the rebound, in global a synchronized upturn. But lately the inflation aspect appears to be quickly deflating. The chart below was part of a broader discussion on the global economic pulse in the latest Weekly Macro Themes report and illustrates a rapid shift.
The chart shows a global view of the prices subindexes of the PMIs - compared with the annual change in the GSCI commodity index. Clearly the commodity rebound drove a lot of the inflation rebound. But given still strong growth dynamics in developed economies and increasingly tighter capacity, I would say the inflation rebound was in the right direction.
Callum is Head of Research at Topdown Charts. Topdown Charts is a chart-driven macro research house covering global Asset Allocation and Economics.