ING with their take on the inflation data from China earlier today:
From ING (in brief):
- The semiconductor chip shortage is going to bring us chip inflation.
- We may begin to see price increases in many parts and goods such as home appliances, cars, and computers, given the continuing global chip shortage. Even bags that do not have a chip in them, use chips in the process of production. This chip inflation may be passed on to consumers and result in a faster CPI growth rate if the chip shortage persists (estimates range from 2022 to 2023).
- I expect that some goods which contain many chips can be charged at higher prices, e.g. goods related to video games. Demand for such goods does not easily fade even if prices increase.
- If producers believe that spending power is not going to catch up with the increase in chip prices then producers will produce goods with fewer chips and perhaps fewer advanced functions, e.g. in automobiles. But some producers will absorb some of the increase in chip prices and suffer a squeeze on margins and profits.
----
Yes, its difficult to see that with a shortage in supply and ever-increasing demand that CPI can stay low. On ING's comment that there may be fewer 'advanced functions' included in products to hold the price down ... this IS inflation also. As products get better (with no price change) this is viewed by the stats people as lower inflation., The opposite will apply also (unless the politicians weigh in with some meddling in calculation techniques), hence higher inflation.
