Incoming April activity readings have been mixed, with notable disappoint-ments in US employment and retail sales. But the inflation news has been un-ambiguous. As energy and food price increases continue to boost headline CPI readings, global core CPI rose 0.4%m/m last month, the largest monthly in-crease in over two decades. Producer and other input price gains are also accel-erating alongside global growth, and a broad range of survey and industry re-ports point to supply constraints building. Thus there is little doubt that inflation will climb significantly this year. After increasing 1.1% in 2020, global CPI prices are set to rise faster than 3% in 2021. Our forecasts remain in flux and this year’s global CPI gains could approach the 3.9% peak reached in 2011. 

Price pressures are stronger than we had expected, but the two main sources behind this inflation spike have been well anticipated.