Assessing global cost pass-through from producer prices to consumer prices

Research evidence excerpt

Assessing global cost pass-through from producer prices to consumer prices

Global Markets Research

24 July 2026Economic Insights

Economics - Global

Research AnalystsAssessing global cost pass-through from

Global Economicsproducer prices to consumer prices

Yiru Chen - NSLWith crude oil prices rising again and El Niño conditions now official (see SpecialReport-

yiru.chen1@nomura.comGaugingwhoismostexposediffoodpricessurge, 15 May 2026), there is a sharp focus

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on the inflation outlook. For 27 major DM and EM economies, we examine the trajectories

Rob Subbaraman - NSLof producer price index (PPI) and CPI inflation since the outbreak of the US-Iran war. We

rob.subbaraman@nomura.comthen compare them to the PPI and CPI trajectories during the energy shock after the

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outbreak of the 2022 Russia-Ukraine war. Our main findings are:

• PPI-CPI pass-through appears more limited and heterogeneous in 2026 than in 2022;

the relationship between cumulative PPI and CPI rises is weaker in 2026 than 2022.

• Initial conditions of healthier margins, weaker consumer demand and less fiscal and

monetary support help explain the less aggressive cost pass-through this year.

• However, delayed pass-through remains a risk if the PPI shock persists, particularly in

countries with a large negative CPI-PPI gap and a historically strong PPI-CPI inflation

correlation.

PPI inflation measures upstream prices in the supply chain and is generally a leading

indicator of CPI inflation (Figure 1). Aggregate CPI inflation for the 27 countries (using

purchasing power parity (PPP) adjusted shares of world GDP, which cover about 75% of

world GDP on a PPP basis) peaked around five months after PPI inflation peaked in 2022.