Inflation Watch: US CPI, China PPI, Survey Data Inflation Watch: US CPI, China PPI, Survey Data Inflation Watch: US CPI, China PPI, Survey Data

Inflation Watch: US CPI, China PPI, Survey Data

Macro 6 minutes to read

Summary:  Global reflation continues and inflationary pressures are building. We run through the latest in global survey data and the read through for inflation.


The Feb US CPI read showed benign inflationary pressures, the core rising just 0.1% versus an expected 0.2% m/m, but this is the last of the higher base effects.

Against incoming easier comparisons and Covid-fatigued consumers that are vaccinated and ready to spend, inflation will soon be a lot higher. Transfers have bolstered incomes, the labour market is rebounding, savings are elevated and US household spending expectations are at a 4-year high. This increase in demand will quickly meet supply constraints and rising input costs.

Following the enactment of the latest COVID-19 relief bill, on average the poorest quintile of households will see annual incomes boosted ~20%, generating an increased capacity to consume for those with the highest marginal propensity to do so. Framing this against the backdrop of a structural shift toward fiscal dominance, we will see significantly higher spending and transfers to the individual bringing a lasting step-up in consumption, compounding supply constraints. That is why we see a pivotal regime change in interest rates/inflation, supercharged by the new era of fiscal dominance, green transformation and supply constraints. Using linear CPI models from a regime characterised by secular stagnation is not going to cut it with these drivers in play.

From semiconductor chips to copper, demand is on the rise while capacity remains constrained. We have underinvested in the production capacity required to meet accelerated digital adoption, green transformation and the recovered spending capacity that comes with this seismic fiscal shift.

Markets have recognised this to some extent and breakevens are on the rise, but inflation will more than “moderately overshoot” based on our methodologies, which is not sufficiently discounted yet. The continued lift in commodity prices, supply constraints, China PPI, ISM price gauges, and Empire State Manufacturing Survey’s along with other global PMI’s are all signalling 3% US CPI could be chip shot against low base effects. This maintains upwards pressure on yields given the regime change in interest rates/inflation being turbocharged by the new era of fiscal dominance, green transformation and supply constraints. Already a lot of the alpha generated YTD has been in response to a global reflationary cocktail and nascent inflation pressures, as the year progresses it will be increasingly important to be on the right side of these trends. Higher inflation, commodities, cyclicals, and higher rates.


Source: Bloomberg and Saxo Capital Markets


US Manufacturing Inflation Pressures


Empire State Manufacturing Survey - Input price increases continued to pick up, rising at the fastest pace in nearly a decade, and selling prices increased significantly.

US ISM Manufacturing PMI - Price pressures building. The survey's measure of prices paid by manufacturers jumped to a reading of 86.0, the highest since July 2008. Raw materials prices increased for the ninth consecutive month.

“Prices are rising so rapidly that many are wondering if [the situation] is sustainable. Shortages have the industry concerned for supply going forward, at least deep into the second quarter.” (Wood Products)

“Things are now out of control. Everything is a mess, and we are seeing wide-scale shortages.” (Electrical Equipment, Appliances & Components)

“We have seen our new-order log increase by 40 percent over the last two months. We are overloaded with orders and do not have the personnel to get product out the door on schedule.” (Primary Metals)

US ISM Services - Measure of prices paid jumps to highest level since 2008.

“Suppliers are taking the opportunity with the commodity-price increases in the last few months to propose price increases that are above and beyond normal expectations, causing significant concern. “ (Accommodation & Food Services)

“Price increases are occurring with more frequency for products containing raw materials such as copper and steel.” (Retail Trade)


China PPI

Rising PPI inflation in China could drive US CPI inflation materially higher and is another indicator of price pressures. Through February the China producer price index rose 1.7% from a year earlier, and 0.8% from the prior month.

Increases in prices across almost the entire commodity complex, from copper, coal, and oil, to battery metals and rare earths, is buoying factory gate prices. China will soon start exporting those inflationary pressures to the rest of the world. An uptick in factory gate prices in China has historically held a close relationship with US headline CPI. As supply side bottlenecks build, demand picks up and input prices continue to move higher, output prices will follow.

Source: Bloomberg


Global Manufacturing Inflation Pressures

Eurozone PMI - Inflationary pressures as input prices rose at the fastest pace since 2011

JP Morgan Global Composite PMI (compiled by IHS Markit) - Price pressures hit 12½ year high. Survey respondents report that inflationary pressures are rising, with the global manufacturing sector facing supply chain disruption, delivery delays and rising cost pressures. 

South Korea Manufacturing PMI - Price gauges hit new peaks. Supply shortages and shipping delays drive survey record rise in prices.

Taiwan Manufacturing PMI - Input costs continue to rise sharply, leading to higher.

India IHS Markit PMI - India's manufacturing sector remained steady despite cost inflation pressures.



The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.