Commodity Prices Are Rising

Broad-based commodity price increases are being driven by structural supply-side constraints and geopolitical risks, particularly the Iran conflict. These pressures reduce global supply chain elasticity, keeping inflation risks elevated and creating policy dilemmas for central banks.

Key Takeaways

• 1.Commodity price increases are structural and driven by supply-side constraints like underinvestment and climate shocks, rather than just the Iran conflict.
• 2.Global supply chains have become less elastic and more vulnerable to disruption, creating a difficult policy trade-off for central banks between growth and inflation.
• 3.The impact of rising commodity prices is uneven; Europe is more vulnerable than the US due to its energy-intensive industry and reliance on imports.

Table of Contents

• COMMODITY PRICES ARE RISING SHARPLY AGAIN SUGGESTING PROLONGED SUPPLY-SIDE PRESSURES
• THE CONTEXT
• THE DATA
• OUR VIEW
• OTHER THINGS TO NOTE
• US CPI report to show another steep rise
• TODAY'S DATA RELEASES

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