We intuitively believe that the rise in protectionism is fueling higher inflation. While there is evidence of price spikes on products targeted by higher tariffs (such as the price of washing machine imports in the United States), aggregate inflation remains low in most developed countries and even falls in many Asian countries.
The latest Chinese figures tend to indicate that China is starting to export lowflation globally again. Chinese CPI for non-agricultural products is up only 1% YoY while the PPI is collapsing to minus 1.2% YoY from minus 0.8%. The outlook is not as bad as in 2015, when China has massively exported deflation to trade partners, but should economic situation continue to deteriorate, the risk of outright deflation would increase significantly.
In the United States, the main measures of inflation confirm that it is close to target. Based on an annual percentage rate, CPI is standing at 1.7% YoY in September, PCE is at 1.6% YoY in August and PCE excluding food and energy is at 2.4% YoY the same month. Inflation is notably supported by a healthy job market and still improving wage growth.