A Shift in Pricing Power

| Multi-Asset

As well as in the developed world, inflation also seems to be rising in the emerging world, particularly in China Production costs have been rising recently, but this has less to do with the impact of oil prices and more to do with the rise in industrial metals. The price of copper, for example, has risen by 70% since its low point in March 2020, reaching levels last seen in 2017. This increase should feed into the Chinese PPI (Producer Prices Index) and see it pick up in the near term. With pricing power shifting to producers, this increase in production costs is not good news: it basically means higher prices in the medium term, should demand remain strong.

 

A Shift in Pricing Power
Source: Bloomberg, Unigestion. Data as at 31 December 2020.


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