Producers in the Driver’s Seat

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Our proprietary Inflation Newscasters and Nowcasters are pointing to higher inflation across developed markets. A look at the composition of these measures reveals the challenges of the current situation. The speed of the recovery has shifted pricing power from consumers to producers and led to a rapid acceleration in the « supply shock » component of our inflation surprise indicator.

Our chart, which shows the z-scored ratios between CPI and PPI across the developed world, highlights this shift in pricing power. With demand strong and supply limited by the consequences of the pandemic, we can expect inflation numbers to continue their upward trend in the months ahead.


Producers in the Driver’s Seat
Source: Bloomberg, Unigestion. Data as at 25 January 2021.

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