Below is a chart and brief excerpt from today's Early Look written by Hedgeye CEO Keith McCullough.
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Eurozone PPI came in at -1.5% Y/Y for May and was the lowest reading since December 2020. The primary driver here was the -13.3% Y/Y decline in energy prices. When considering inflation, it is important to look at a slightly longer-term trend. Eurozone PPI is actually the perfect example of this. In the Chart of the Day, we look at PPI in aggregate versus its Y/Y change going back to the early 1990s. As this chart shows, over the past couple of years, the absolute price level of PPI is still up massively despite the Y/Y increases slowing. In fact, versus pre-pandemic levels, the absolute price levels of PPI remains up some +30%! This is the dilemma that global central bankers continue to face. Yes, inflation readings have come down, are decelerating, and may be negative on some measures ... but absolute price levels on both consumer and producer-oriented inflation have been reset significantly higher over the past couple of years. |
