As the world’s central banks step up their fight against inflation, one of the underlying aggravating factors appears to be easing, says Moody’s Investors Service.
In a new report, the rating agency said that certain high-frequency data indicates that bottlenecks in the global supply chain are subsiding, which is good news for inventories and inflation.
In particular, delivery times are declining, port congestion is easing, factory production is outpacing new order growth and new exports are declining rapidly, Moody’s said.
“The improving demand-supply balance is most visible in faster delivery times, slowing demand for semiconductors and declining freight transportation costs,” the report said.
“Shortened delivery times in the U.S. and across Europe are allowing businesses to restock inventory and meet order backlogs.”
This reduction in supply constraints, “should ease price pressure, and improve inventory restocking,” it said.
At the same time, weakening demand amid higher costs and tighter financial markets is also helping to ease pressure on supply chains, the report noted.
Declining transportation costs will help cool supply-side inflation pressure too, the report noted.