The global inflation shock is fading fast. After soaring for the better part of two years, food- and energy-driven headline price measures are coming down more quickly than expected, and core inflation rates (i.e., excluding food and shelter) have tumbled across all major developed economies.

With supply chains now largely repaired, Western consumer demand slowing, and the Chinese government pouring stimulus into the manufacturing sector, prices are falling for internationally-traded goods. At the same time, a weakening global demand outlook is intersecting with surging non-OPEC production to put oil benchmarks – critical in driving consumer inflation expectations – under sustained pressure.

Producer price indices measures, annual % change