The latest sign that the wild ride of soaring demand and prices we've seen over the past year might be slowing: A global index that tracks costs among companies across both the manufacturing and services sectors fell to a four-month low in June.
The big picture: The pullback is due to a mix of easing supply chain woes, less inventory buildup by producers, and a "gloomier economic outlook," writes Chris Williamson, chief business economist at S&P Global Market Intelligence, which compiled the index from surveys of companies in 45 countries.
Why it matters: Signs of cooling demand are everywhere as recession jitters spread. But this is just what the doctor (er, Jerome Powell) ordered, and a sign that inflation may be slowing down in the months to come.
State of play: Prices are falling for a bunch of key commodities: Oil, lumber, wheat and corn, as the WSJ reported earlier this week.
Yes, but: Prices for all these things are still very high, compared to where we were before the pandemic. And there's no real indication we're going back to the cheaper pre-pandemic times.
"We see an era of structurally higher commodities prices ahead," the authors of BlackRock's weekly market commentary wrote earlier this week. "Rate hikes…could cause more dips. But we think prices are at structurally higher levels now."
What to watch: It takes about three months for the lower producer costs to filter down to consumers — where they should show up in the closely-watched Consumer Price Index, S&P's Williamson says.
