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World Inflation Falls To A New 5-Year Low

From Gavekal Capital Blog

World Inflation Falls To A New 5-Year Low

It's become a running theme, at least since last September, but the latest release of CPI numbers from around the world has brought our simple average World CPI proxy to its lowest level since the financial crisis. For the period ending in February, our World CPI proxy hit just 1.01% year-over-year. This is the lowest rate of change since November 2009. The year-over-year rate in our World CPI proxy has been falling for six months straight.

Oil has undoubtedly dragged down the headline CPI for many countries around the world. However, our World CPI proxy has the highest correlation (0.78) to the Citi Inflation Surprise Index which is near its lowest levels ever. 14 of the 33 countries that we track currently have a year-over-year change in consumer prices at or below 0%.

Our World PPI proxy bounced back slightly in February but still remains squarely in negative territory year-over-year (-2.43%).