Global PMI shows inflation rates have further to rise as input costs increase at steepest pace for 3½ years

PMI survey data showed the steepest rise in global input cost inflation for three-and-a-half years in May, which fed through to sharply higher selling prices for goods and services. With stronger or highly elevated rates of selling price inflation seen across all major developed economies, this points to higher consumer prices in the months ahead.

Inflation on the rise

Measured across both goods and services, average prices charged rose worldwide in May at the second-strongest pace since October 2022, the rate of inflation dipping only slightly compared to April.

This level of price growth is typically consistent with global consumer price inflation accelerating to around 5% in the coming months (up from an estimated 3.9% rate in April, based on available official data).

While goods price inflation has risen especially sharply since the outbreak of war in the Middle East, service sector inflation has also risen markedly compared to earlier in the year, running at three-year highs in the past two months. That said, rates of increase dipped slightly in both manufacturing and service sectors in May.

However, global input cost inflation meanwhile accelerated to the fastest since November 2022 when measured across both manufacturing and services, hinting that the rate of selling price inflation could accelerate again in both sectors in June.

Rates of inflation rise in the US, eurozone, Canada and hit a record high in Japan

Especially steep rates of selling price inflation (across goods and services) were again recorded in the UK and Brazil. In both cases, rates of inflation cooled slightly since April, but remained among the quickest seen since early 2023 and mid-2022 respectively.

Rates of output charge inflation meanwhile accelerated in the US, Japan, eurozone and Canada. While US selling price growth hit a 10-month high, Japan’s rise was the steepest since comparable survey data were available in 2007, and eurozone and Canadian rates of increase accelerated to the highest since early 2023. Price growth in Australia was meanwhile the second-highest since mid-2022.

Selling prices rose more modestly by comparison across mainland China, and the inflation rate moderated in India. Selling price inflation in Russian ticked higher.

Major economies, PMI vs. CPI comparisons