Semiconductor, Shipping, and Fertilizer Prices Peak... Signal of Inflation Peak?

Source: Bloomberg

[Asia Economy Reporter Kim Hyunjung] Bloomberg reported on the 6th (local time) that semiconductor, shipping, and fertilizer prices, which had been driving global inflation, have peaked and turned downward, signaling that inflation has reached its peak.

According to the report, the fixed price of PC DRAM, a barometer for prices of electronic products such as laptops, dishwashers, LED bulbs, and medical devices, fell to $17.1 at the end of last month, reaching half the level of July 2018. This price is also 14% lower compared to mid-last year ($19.8).

The container shipping cost, which determines the price of all products involving logistics, has dropped 26% from the peak recorded in September 2021, and North American fertilizer prices, which provide a preview of global food prices, are 24% lower than the March peak.

The report stated, "As U.S. inflation is expected to exceed 8%, central banks worldwide are busy trying to curb it," adding, "However, many economists agree that inflation has reached its peak."

In fact, the inflation rate in the Eurozone has surpassed 8%, and the U.S. Consumer Price Index (CPI) for May, to be announced on the 10th, is expected to be even higher.

Koon Go, Head of Asia-Pacific Strategy at Australia and New Zealand Banking Group (ANZ), diagnosed, "While inflation has not yet peaked in some parts of the world, signs are emerging that the turning point, where the annual inflation rate begins to decline, is not far off."

In reality, China's prices peaked at the end of 2021 and have started to moderate. Economists forecast that China's factory gate prices in May will show a 6.5% increase, which is lower than the 8% recorded in April.

Koon Go explained, "Positive indicators that can stabilize the prices of imported goods worldwide are being confirmed," adding, "Through reductions in container shipping fees and improvements in supplier delivery times in the Purchasing Managers' Index, supply bottlenecks can be eased in the latter half of this year."

On the other hand, there is also a view that the current situation of China lifting its zero-COVID lockdowns is a factor fueling inflation. The Bloomberg Commodity Spot Index, which tracks 23 raw material prices, rose 1.9% that day, reaching an all-time high. This is interpreted as a result of renewed concerns about supply, with futures contracts for natural gas and wheat surging. This index has jumped 36% so far this year, marking the largest annual increase in over a decade.

This content was produced with the assistance of AI translation services.