The war in Ukraine has raised the importance of getting accurate forecasts for inflation in consumer and producer prices in different markets. EIU now expects global inflation to surpass 6% this year; with that marking a significant climb from the 2021 average of 5.2%, it is no wonder there is panic over spiralling costs. Nonetheless, this should not obscure a wider diversity of trends across the world that each can mean different things for your business—not all of them bad.
Some prices may even fall, as rising shipment costs and shortages resulted in stockpiling of unsold products. In Asia, we forecast that consumer price inflation will average only 3% this year—more moderate than in the US (6.2%), the UK (5.4%) and the euro zone (3.7%). In China, rising shipment costs and shortages affecting industries that normally operate on thin margins have resulted in warehouse stockpiling of unsold products.
As global demand moderates this year, producers will be keen to destock and shore up their bottom lines. Sales volume may be prioritised over margin, assuming that China continues to succeed in suppressing periodic outbreaks of covid-19, to which its population remains extremely vulnerable until mRNA vaccines are either developed or allowed into the country. This may provide a welcome respite for consumers, while assisting with manufacturing continuity and cooling global inflation.
Time to lock-in higher prices?
A consequence of these dynamics, as well as a heightened sense of caution by major central banks, is that interest rates might not actually go up by as much as markets fear. Now might be the time to lock-in higher prices if you are selling but to avoid long-term contracts for inputs. We are expecting considerable divergence in the trajectory of commodity prices most affected by the Ukraine crisis. Looking into 2023, we see divergent trends for metals on one hand and energy and agricultural commodities on the other, and a similarly wide dispersion in the growth outlook for key G20 markets.
Up-to-date country data and forecasts
The war in Ukraine underscores the importance of having access to reliable, consistent and up-to-date data and forecasts across different countries, regions and industries. Otherwise, it becomes impossible to generate a complete picture of what risks and opportunities lie ahead, and how best to adapt your commercial strategy.
Navigate the increasingly complex global environment
This understanding sits at the heart of our work at EIU. We provide businesses with the tools they need to have a nuanced insight into global trends, incorporating them into their daily operations. EIU Viewpoint, our new country analysis solution, gives reliable, award-winning medium and long-term forecasts, covering nearly 200 economies, six major industries and 25 commodities.
Identify opportunities and mitigate risks
Our Risk Briefing and Country Risk services enable clients to spot the next crisis before it starts (at the country, regional or global levels) and to stay well ahead of their competitors. Access China offers independent and coherent analysis to identify opportunities and risks across China’s provinces and cities. Our international team of experts are also available for bespoke briefings and strategic planning sessions.
Whether comparing different markets, designing risk scenarios or planning a new investment strategy, EIU’s services are designed to help your business prepare for the next opportunity.
To find out how EIU can help your organisation, visit our website (www.eiu.com) or get in touch with our customer services team.
T: +44 (0) 20 7576 8000