According to JP Morgan’s monitoring, both headline and core global inflation, excluding China and Turkey (where China is experiencing deflation and Turkey has a double-digit inflation rate), increased slightly by 0.3% on a monthly basis in January. While their annual variations continued to decline, headline inflation rebounded to 2.6% in the last three months up to January. Core inflation (excluding volatile components such as food and energy) also saw a slight increase, reaching 3%.
U.S. core goods prices, excluding autos (e.g., apparel, electronics, furniture, etc.), rebounded by 0.16% monthly in January, indicating the end of global goods price deflation in the first half of 2024. Another interesting point to note is that container shipping costs have surged by 150% since the beginning of December. However, supplier lead times still remain near historical levels, suggesting limited impact so far due to geopolitical tensions in the Middle East. Additionally, oversupply in China continues to exert downward pressure on manufactured goods prices.
Furthermore, there was a 0.5% monthly increase in services prices, driven by a 0.7% increase in the United States. Core services (e.g., shelter, medical services, education, etc.) increased by 0.46% on a monthly basis, marking their largest increase since December 2022, pushing the annual rate for the last quarter above the 4-4.5% range. Much of this rebound was attributed to the increase in the United States, reaching an annual rate of 6.2%, while services inflation in developed countries, excluding the U.S., remained stable at 3% annually. Particularly noteworthy was the continued pressure on shelter costs in the United States.
Global food inflation remained stable at close to 3.5% annually, although food inflation in emerging markets accelerated to 6.5% annually. The latter was due to a spike in the weather phenomenon known as “El Niño,” causing localized increases in fresh food prices in Mexico and Brazil.
With this mix of factors, core inflation (a metric of particular interest to central banks) at the global level is expected to rebound to 3.3% in the first quarter of 2024, compared to 3% in the fourth quarter of 2023. In this context, conditions suggest that monetary authorities, especially within developed countries, may temporarily postpone interest rate cutbacks, pending clearer signals of more significant cooling in key categories such as essential services and housing.
Global Consumer Price Index (CPI) headline and core (excluding China-Turkey), monthly variation (%)
- The dotted lines refer to the three-month moving average.
Source: JP Morgan