Inflation across regions rises during rebound

Sources: Bloomberg, and Wells Fargo Investment Institute. Monthly data from January 1, 2007 to August 31, 2021. BRIC is an acronym for the economies of Brazil, Russia, India, and China. CPI is the Consumer Price Index, which measures the price of a fixed basket of goods and services purchased by an average consumer. PPI is the Producer Price Index, which measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services. YoY = year-over-year.

Key Takeaways

  • Aggressive monetary and fiscal stimulus has supercharged a powerful post-pandemic recovery, lifting inflation in most developed economies to levels not seen since the Global Financial Crisis over a decade ago.
  • Even a modest rise in interest rates propelled by higher inflation poses a threat to stability of more highly charged financial markets following years of aggressive monetary stimulus by central banks in the U.S. and abroad.