On the other hand, consumers are slowing down their demand for big-ticket items and durables, further easing the strain on supply chains. This is because they got to put up with weaker purchasing power because of higher inflation.
“Just as core goods inflation rose sharply last year when sales outpaced inventories, rising inventories-sales ratios today could be consistent with falling goods prices inflation in some sectors. The manufacturing PMI prices index is also slowing quickly,” says Fitch Ratings.
To be sure, risks remain. China’s zero-Covid policy has continued to stress supply chains; gas rationing in Europe because of the war between Russia and Ukraine may affect industrial supply chains.
“Nevertheless, recent improvements to global supply chain pressures are encouraging,” says Fitch Ratings.
