Impact of Inflation on the World Economy and Key Sectors (Agriculture, Automotive, Financial services, Consumer and Retail)

Description

List of Tables

Inflation Outlook - Executive Briefing report analyzes the outlook for inflation and the implications for the global economy, major countries and regions, as well as key industry sectors This report includes expert opinions from our industry analysts, macroeconomic analysts, thematic analysts, and data scientists from all around the world. On a 12 month view, it appears likely that commodity prices have peaked, but the outlook for margins will vary by region Input price inflation is falling due to the weakening economic outlook in China (largely driven by the slowing property market), as well as European demand weakness The main upside risk to inflation is Russia's 'forever war' in Ukraine.

Recessions across many developed markets ( are expected before the end of 2022 which will in turn reduce the labor component of inflation However, while this lowers input costs, it means reduced demand as the pressure on consumers increases This is likely to see central banks ease on the current interest rate rising cycle, with the US likely to be the first developed market see a return in consumer demand as disinflation helps to restore purchasing power China's cyclical outlook is sharply divergent from western markets, with the end of zero COVID, most likely around Q 2 next year, releasing pent up demand, though on a much smaller scale than see in developed markets in 2021.

Key Highlights

12 month outlook: Commodity prices have peaked, but margins outlook will be region specific

As prices rose in 2021 2022H1, firms across all sectors were able to pass on these costs while demand boomed.
Input price inflation is retreating ahead of the US demand slowdown, and is driven instead by China's property market brakeage, and more advanced European demand weakness. That means pricing power in the US should hold up better.

2023: Recession will pull down labor cost inflation but also rein in pricing power

Recession across DMs is likely before end 2022; labor cost pressures should then moderate. This helps with input costs but also means an erosion of pricing power as demand weakens, though central banks will switch to easing once the labor market cracks.

The rest of the 2020s: A higher inflation regime

A global shift in labor markets means higher wage inflation, while de globalization means domestic costs in DMs will be more responsive to domestic labor market conditions.
Demand is set to rebuild, particularly in the US, where greater policy tolerance of wage growth and resultant inflation means a re building of middle income household demand.

Scope

The report analyzes the outlook for inflation and the implications for the global economy, major countries and regions, as well as key industry sectors. This report includes expert opinions from our industry analysts, macroeconomic analysts, thematic analysts, and data scientists from all around the world.
Provides detailed global macroeconomic outlook analysis.
Covers detailed insights on the Agriculture, Automotive, Financial services, Consumer and Retail sector outlook.

Reasons to Buy

Gain access to understanding the impact of inflation on the world economy and key sectors.
View inflation outlook analysis and the implications on the global economy, major countries and regions, as well as key industry sectors.
Refer expert opinions from industry analysts, macroeconomic analysts, thematic analysts, and data scientists from all around the world.

Product Code: GDMAC-TR-S001

Executive Summary

Part 1: Global Macro Outlook

Part 2: Sector outlook

1. Agriculture

2. Automotive

3. Financial services

4. Consumer

5. Retail

Appendix 1: Glossary
Appendix 2: Thematic Research Methodology
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Product Code: GDMAC-TR-S001

List of Tables

Table 1: Automotive: impact assessment
Table 2: Insurtech sector sees investment dry up as tough economic conditions hit hard - Selected examples of insurtechs that have recently announced redundancies

List of Figures

Figure 1: US: A fresh credit cycle will support higher inflation in the 2020s; inflation is a process that is financed 2020s and bank loan to deposit ratios are at their lowest since the early 1950s
Figure 2: China : Loss of competitiveness will crimp Chinese wage growth and create a space for faster gains in DM labor costs
Figure 3: Euro area: is stagflation becoming embedded?
Figure 4: UK: all eyes on wages
Figure 5: Commodity prices probably have peaked
Figure 6: US: input cost inflation abating but pricing power lingering
Figure 7: China: oil price fall should ease margin pressure
Figure 8: EA: imported inflation coming off but domestic problems
Figure 9: Food prices retreat but remain high
Figure 10: US input costs coming off
Figure 11: Futures prices still suggest moderate pork price pressure for China
Figure 12: EA survey suggests input costs are just turning the corner
Figure 13: Underlying imbalances remain……suggesting US margins will benefit as input prices recede
Figure 14: China: goods demand disappointed in 2022 lockdowns
Figure 15: As with the US, the level of prices looks exposed to downward correction in the EA
Figure 16: Korean semiconductor export prices have rolled over
Figure 17: US vehicle pricing remains elevated though pace is cooling
Figure 18: Saving of high income households during COVID supported strong demand for SUVs and foreign cars
Figure 19: EA: easing in bottlenecks has given some relief to production but this has not yet filtered through to prices
Figure 20: Chinese labor uncompetitiveness lifts the lid off DM wage
Figure 21: Sticky wage growth will keep US services inflation hot
Figure 22: China: labor markets have deteriorated sharply, and pricing power was already weak
Figure 23: French survey suggests still strong wage growth but hiring intentions are softening
Figure 24: Residential prices have run away during the pandemic
Figure 25: US: Even at this stage, the backlog in single family homes yet to be started remains at a record
Figure 26: China input prices remain on a weakening trend as the property sector slump extends
Figure 27: EA construction stands to receive a boost from public investment
Figure 28: Mexico: Headline CPI is likely to peak in Q3/22, but Banxico will carry on hiking rates in the coming months amid still rising core inflation and ongoing Fed tightening
Figure 29: Contribution of key components to headline CPI (%)
Figure 30: CPI key components (% YoY change) and key policy rate (%)
Figure 31: Food prices - Commodity prices have been rising since 2021, but for some more than others
Figure 32: FAO price index - Commodity prices have been rising since 2021, but for some more than others
Figure 33: Selected commodity prices - Ukraine/Russia are important sources of wheat, corn/maize, and sunflower oil
Figure 34: Selected commodity prices - Black sea share of global corn, wheat sugar
Figure 35: Selected oilseed prices - Selected commodity assessments
Figure 36: Sugar prices - Selected commodity assessments
Figure 37: Wheat and Corn/maize prices - Selected commodity assessments
Figure 38: Coffee/Cocoa prices - Selected commodity assessments
Figure 39: Fertiliser prices, EU and US Gulf - Input prices are still high
Figure 40: US Customer facing transaction prices, US$
Figure 41: Light Vehicle Selling Rates, 2019 = 100
Figure 42: Production Disruption by Quarter
Figure 43: Global Light Vehicle Sales Forecast
Figure 44: Vehicle Body Composition
Figure 45: Vehicle Powertrain Composition
Figure 46: Investment assets of households by major asset class, globally
Figure 47: Investment allocations, total market globally
Figure 48: Global private wealth managers as of Q2 2021
Figure 49: Global private wealth managers as of Q2 2021
Figure 50: Australian balances outstanding, $B
Figure 51: HK balances outstanding, $B
Figure 52: New Zealand balances outstanding, $B
Figure 53: US balances outstanding, $B
Figure 54: Total global investment into insurtech, 2018 2022 YTD ($M)
Figure 55: How much do you pay for your car insurance cover per year? 2021
Figure 56: Reasons for switching motor insurance provider at renewal (%), 2021
Figure 57: Financial concerns among UK income protection policyholders (%), 2021
Figure 58: Global: "How concerned are you about the following factors?", Q2 2022
Figure 59: Global: "How concerned are you about the following factors?" Impact of Inflation/personal financial situation, Q2 2022
Figure 60: The impact of inflation on my household budget
Figure 61: The cost of home energy bills
Figure 62: The cost of fuel for my car
Figure 63: The cost of my mortgage / rental payments
Figure 64: United States: The impact of inflation on my household budget by age and income
Figure 65: India: The cost of home energy bills by age and income
Figure 66: Global: retail sales value and volume 2021-2024, food and drink super categories
Figure 67: Global market forecasts 20212024 compared with 2016 2019 performance
Figure 68: US: "How would you describe you spend on the following products?", Q1 vs Q3 2022
Figure 69: Staying with the brands I usually buy, but buying less - "How do you see your purchasing choices evolving over the next three months?" Q3 2022
Figure 70: Switching to cheaper stores / cheaper outlets - "How do you see your purchasing choices evolving over the next three months?" Q3 2022
Figure 70: "How do you see your purchasing choices evolving over the next three months?" Q3 2022
Figure 71: Stopping buying certain products altogether because they are becoming too expensive - "How do you see your purchasing choices evolving over the next three months?" Q3 2022
Figure 72: Eating out at restaurants - "How do you see your purchasing choices evolving over the next three months?" Q3 2022
Figure 73: United Kingdom: Switching to cheaper stores / cheaper outlets by age and incom - How do you see your purchasing choices evolving over the next three months?" Q3 2022
Figure 74: Australia: Eating out at restaurants by age and income - How do you see your purchasing choices evolving over the next three months?" Q3 2022
Figure 75: Global: OBP Value CAGR 2021-2024, compared to OBP Volume recovery 2019 (pre pandemic) versus 2024
Figure 76: US: "How would you describe you spend in the following outlets?", Q1 vs Q3 2022
Figure 77: Prices UK CPI Annual Growth %
Figure 78: UK Interest Rate %
Figure 79: UK Unemployment Rate %
Figure 80: UK gross household income 2019/20 --% share of individuals by household
Figure 81: How concerned are you about your personal financial situation? % of UK consumers
Figure 82: Consumers' inflation views by product and service %
Figure 83: What will consumers spend less or more on % ?
Figure 84: Responses to the question: With the price of goods expected to rise by at least 5% this year, how do you think your shopping ha bits will change for the following items?
Figure 85: How consumers intend to change their clothing & footwear shopping habits due to rising prices, by demographic
Figure 86: How consumers intend to change their homewares shopping habits due to rising prices, by demographic
Figure 87: UK annual retail market growth year on year
Figure 88: 2022 UK sector share (%) of consumer expenditure in retail 2019, 2022
Figure 89: 2022 UK spend scenario

Impact of Inflation on the World Economy and Key Sectors (Agriculture, Automotive, Financial services, Consumer and Retail) - Thematic Research

Description

Table of Contents

List of Tables

Key Highlights

Scope

Reasons to Buy

Table of Contents

Table of Contents

Part 1: Global Macro Outlook

Part 2: Sector outlook

1. Agriculture

2. Automotive

3. Financial services

4. Consumer

5. Retail

List of Tables

List of Tables

List of Figures

List of Figures