This is one of those “glass half empty, glass half-full” questions. But even as the Fed responded over the summer to some disappointing inflation prints, the underlying trend for supply chain disruption, energy prices and input and output cost inflation at companies was continuing to improve. That trend has continued in the latest data though – for energy in particular – prices remain much higher than normal.
For the PMI input price readings are back in to what you might call the normal range; for output prices they are nearly there.
Shipping rates – one of the hallmarks of supply chain disruption and higher transports costs more generally – have also normalized, or nearly normalized. It also showed up in the Commodity Supply and Demand PMI published this week: …
But the downward tend in energy and raw material inflation does seem to be filtering through to wages too… Encouraging news for the Fed, albeit not enough yet for them to consider pausing just yet.