Setting aside energy producers, whose markets are currently influenced by unusual factors and relatively inelastic demand, intermediate goods producers stand out. Here, prices are rising, while implied sales volumes remain broadly stable, pointing to relatively favourable pricing conditions. Capital-goods producers also retain some pricing room.
The picture changes significantly further downstream.
Among consumer goods manufacturers, weak purchasing power and subdued spending appetite are clearly visible, particularly in durable goods. Cars, furniture, clothing and household appliances are purchases that consumers can postpone when prices rise. And that seems to be exactly what’s happening. Recent price increases were accompanied by falling volumes and lower turnover.
While pricing power may still exist upstream in the production chain, it increasingly disappears before reaching the consumer. This yields two important conclusions: (i) the pass-through of higher energy prices to final consumption, and hence inflation, continues to look unlikely; and (ii) if the consumer is not paying the bill, someone else will have to.