Inflation dynamics have ceased to be perfectly aligned in the main economies in 2023. While the 2021-2022 inflation shocks were in good part global, the 2023 picture shows significant and, perhaps, unusual divergence.
Among all sectors, the automobile sector is a good illustration.
On paper, price dynamics in the sector should be reasonably aligned: supply chains are global and dominated by large, interdependent multinational firms, as we have learned the hard way in 2022.
Our data shows that car price dynamics have widely diverged in the main economies in 2023, however.
This is something we have been able to monitor internally using the News Balance. We have identified news articles about both new and used car prices in local languages and the same templates are applied across countries. Those metrics can be computed in real time (daily frequency and the data for day d is released on d+1).
In the US, car price news have been predominately negative in the last 13 months or so:
The chart shows the seven-day (dotted line) and thirty-day (plain) News Balance for car prices. 0 is neutral; +1 is the maximum positive value and -1 the maximum negative value.
The picture is even more negative in China where a severe price war involving both local and international car manufacturers took place at the start of the year. The price dynamics has not turned positive beyond that episode:
In contrast, the news flow in the euro area countries, to this day, is still predominently positive, albeit a bit more balanced now than 12 months ago:
The picture is even clearer in Japan, largely immune to price drops, in line with stronger overall inflation dynamics than elsewhere (as per our NIPI, for instance):
Not all relevant information may be in news articles. But Language Models through a tool like the News Balance can synthetise all the information from news articles in ways unheard of just a few years ago.