My Worst Investment Ever Podcast ISMS 12: CPI Racing Across the Globe
Mar 20, 2023
20:33
Is global CPI going to follow the US CPI slowdown?
Global Markets
Global CPI has leveled off and is slowing in DMs, but still rising in EMs
- Economies across the world have GDP of about US$90trn and an average CPI rate of 7.4%
- The developed world has GDP of US$52trn and CPI of 6.9%
- And the emerging world has GDP of US$38trn and a higher 8.2% CPI rate
World Jan. 2023 CPI was 7.4%, up 2.1ppts YoY; MoM DM continues to fall, while EM is rising
- DM Jan. 2023 CPI was 6.9%, up 1.5ppts YoY, but falling slightly MoM
- EM Jan. 2023 CPI was 8.2%, up 2.9ppts YoY, and is rising MoM
Key points
- Global CPI was 7.4% in January, up 2.1ppts YoY, but it was flat MoM
- Developed world CPI was 6.9%, up 1.5ppts YoY, but falling slightly MoM
- Emerging world CPI in January at 8.2%, up 2.9ppts YoY, and it rose MoM
Developed Markets Regions
CPI is contained in DM Americas, peaking in DM Europe, and rising in DM Asia
- With in the Developed Markets, DM Americas is the largest with US$25trn of GDP and 6.3% CPI
- Developed Europe has US$15trn of GDP and a higher 8.3% CPI
- Developed Pacific is smaller at US$8trn and has the lowest CPI of the developed regions at 5.1%
DM Americas CPI falling, DM Europe peaking, DM Asia rising
- 12 months ago, DM Americas had a 7.4% CPI which is now down to 6.3%, a 1.1ppts fall
- This means that CPI went from 2.1ppts above the global average to 1.1ppts below
- DM Europe rose from 4.4% 12 months ago to 8.3%, up 3.8ppts
- This means it went from 0.9ppts below to 0.8ppts above the global average
- CPI is racing up in DM Pacific from 1.5% 12 months ago to the current 5.1%, that’s a 3.6ppts increase
- It has gone from 3.8ppts lower than World CPI to 2.4ppts lower
Key points
- DM Americas 6.3% January CPI is down from 7.4% 12 months ago; and has now shifted from being 2.1ppts above the global average to 1.1ppts below
- CPI nearly doubled in DM Europe over the past 12 months from 4.4% to 8.3%, shifting from about 1ppts below to 1ppts above the global average
- CPI in the must smaller DM Pacific region raced up from 1.5% 12 months ago to the current 5.1%; despite that massive 3.6ppts increase, it remains about 2.4ppts lower than the global average
Emerging Markets
EM CPI rising in Asia, Middle East and Africa, and Frontier markets on fire
- EM Americas had a small GDP of US$3.8trn and CPI of 7.9%
- EM Asia had a massive GDP of US$25.7trn and 3.2% CPI
- EM Europe had US$3.9trn GDP and a massive 23% CPI
- EM Middle East and Africa had a small US$1.7trn GDP and a high 10.2% CPI
- Finally, Frontier markets had US$2.9trn GDP and 30% CPI
EM CPI rising in Asia, Middle East and Africa, and Frontier markets on fire
- EM Americas CPI was 7.9% in January, down slightly from 8.5% 12 months ago
- EM Asia CPI went from a tiny 1.9% 12 months ago to 3.2% and is still 4.3ppts below the World CPI
- Most notably, this has ticked up slightly MoM
- EM Europe CPI was 23% and over the past two months has been falling; though it is still 15.5ppts above the World average
- EM ME&A CPI was 10.2% compared to 3.7% 12 months ago. It has now risen to be 2.8ppts above the world average compared to 1.7ppts below 12 months ago
- Consumer prices are on fire in Frontier markets up 30% YoY in January; this is double where they were 12 months ago; CPI keeps rising MoM and is now 22.5ppts above the world average
Key points
- EM Americas CPI was 7.9% in January, down slightly from 8.5% 12 months ago
- EM Asia CPI went from a tiny 1.9% 12 months ago to 3.2% and is still 4.3ppts below the World CPI. Most notably, this has ticked up slightly MoM
- EM Europe CPI was 23% and over the past two months has been falling; though it is still 15.5ppts above the World average
- EM ME&A CPI was 10.2% compared to 3.7% 12 months ago. It has now risen to be 2.8ppts above the world average compared to 1.7ppts below 12 months ago
- Consumer prices are on fire in Frontier markets up 30% YoY in January; this is double where they were 12 months ago; CPI keeps rising MoM and is now 22.5ppts above the world average
Developed Markets
CPI is flattening in major developed markets, led by US CPI fall
- Top five DM countries
Only US CPI is falling YoY; UK has started falling MoM; Germany, Japan, and France are rising
- USA CPI was 6.4% in January, down from 7.6% a year ago; it has gone from 2.2ppts above the global average to -1.1ppts below
- February just came out for US CPI at 6.0%. Unfortunately, February numbers are not out for all the other countries, so we focus now on January
- Japan's CPI went racing up from 0.5% 12 months ago to 4.4% in January; though it remains at a deep discount to the global average, it appears to be closing that gap
- Germany's CPI doubled from 4% 12 months ago, which was 1.4ppts below the worldwide average, to 8.8% now, 1.3ppts above the global average
- UK CPI started 12 months ago relatively high at 5.4% and is now has doubled to 10.2%; though it has fallen slightly MoM
- France's CPI was a low 3% a year ago and has doubled to 6.1%, which is still 1.3ppts below the global average
Key points
- USA CPI fell to 6.4% in January and 6.0% in February, going from 2.2ppts above the global average to 1.1ppts below
- Japan's CPI increased by 8x from 0.5% 12 months ago to 4.4% in January
- Germany's CPI doubled to 8.8%, going from 1.4ppts below the worldwide average to 1.3ppts above
- UK CPI doubled to 10.2%; though it has fallen slightly MoM
- France's CPI doubled to 6.1%, which is still 1.3ppts below the global average
Emerging Markets
CPI uptick in EM Asia giants, China and India, could keep EM CPI rising
- Emerging world
CPI is rising YoY in China, India, Korea, and Russia; falling only in Brazil
- China's CPI at 2% is low but rising; 12 months ago, it was at 0.8%, and it has been slow to rise, partially because of the covid lockdown; it is 5.4ppts below the global average and could rise substantially
- India's 6.5% CPI was almost flat compared to 12 months ago, hovering at about the global average
- Korea CPI at 5.2% has been steady at about 2ppts below the global average and is up 1.7ppts from 3.5% 12 months ago
- Russia's CPI was 11.8% in January and has been on a steady decline from its 18% peak in April 2022 near the start of the war; though it is still 4.3ppts above the global average
- 12 months ago, Brazil was struggling with about 10% CPI, but previous aggressive rate hikes have cut CPI in almost half to 5.8%, taking it from 4.9ppts above the global average to 1.7ppts below
Key points
- China's 2% CPI is 5.4ppts below the global average and could rise substantially
- India's 6.5% CPI has been steady at about the global average, low risk of shock
- Korea CPI 5.2% was up 1.7ppts but has been steady at about 2ppts below the global average
- Russia's CPI has been on a steady decline from its April 2022 18% peak to 11.8%
- Over the past 12 months, Brazil cut its CPI in half to January's 5.8%, moving it from 4.9ppts above the global average to 1.7ppts below
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