A sustained rally in commodity prices is not the only reason behind high inflation cycles, other factors play in. However, high commodity prices have been tied to tighter monetary policy regimes. The same can be said on global supply chain stress, if it raises due to covid restrictions or terrorist threats, it could influence global prices and therefore policy
The chart below shows the <.GSPC> NYFed Global Supply Chain Index (red) compared to consumer and producer prices. The data series is updated monthly, and you can find more info here
We can see global supply chain pressures rising after the pandemic hit and well into late 2021, price measures lagged supply chain pressures as both CPI and PPI peaked a few months later
Easing global supply chains sent the gauge to below pre-pandemic levels last year, but this doesn't mean that prices should do the same today. Despite the fact that Covid feels like a decade ago, we have only lived a coupe of years with the economy running back to normal levels
It may take a few more months for a continuation of the precedent price adjustments. Meanwhile, global supply chains remain supportive of further slowdown in price measures and out of the way for policy to play its role in the demand side of the equation
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