📝 Global Inflation To Peak At 6.5% Y/Y In 3Q22, 8.6% Q/Q In 2Q22: J.P. Morgan

Global headline CPI rose 0.6%m/m last month, easing from a record 1.2% gain in March.A pullback in energy prices (concentrated in the US and Euro area with 3% declines after surging 10-12% in March) drove much of this slowdown. Global ex China food inflation picked up to a 13.8%ar pace over the past three months, with EM ex China up 17%ar—its fastest pace since at least 2008. Trade bans risk further exacerbating global supply shortages. Global core inflation eased to 0.4%m/m from 0.6% (largely on the back of a rapid deceleration in Russia), while DM core ticked higher to 0.5%m/m. The 5.4% annualized global core CPI gain (ex. China, Turkey and Russia) over the past three months remains above the 4.8% over-year-ago rate. Our forecast looks for global inflation to peak at 8.6%ar pace in the current quarter, while the over-year-ago rate should peak in 3Q22 at 6.5% with the EM peak coming a quarter later than DM. Core inflation too is seen decelerating sharply, to 3.25%ar from above 5%in 1H. The risk is still that price pressures prove more persistent if food and energy prices continue to rise and if China’s lockdowns disrupt supply chains.

- J.P. Morgan Economic Research