While there are signs that inflationary pressures have begun to ease, rising prices remain a central focus of political and economic discussions. However, one of the main drivers of inflation—rising commodity prices caused by Russia’s invasion of Ukraine more than a year ago—appears to be a thing of the past.

The Bloomberg spot commodity price index—which covers major commodities, including metals, energy, and food—has fallen 10% since the beginning of this year. What are the main reasons for the decline? There are several, including lingering fears of a global recession, a weaker-than-expected recovery of the Chinese economy following the pandemic, and the normalization of supply chains after the bottlenecks experienced in 2022, which is reducing logistics costs. The World Container Index, compiled by the consulting firm Drewry, fell from about US$7,600 per 40-foot container a year ago to just under US$1,700 in early June.

Are we seeing the end of inflation? It's too early to claim victory. The war in Ukraine continues and will remain a source of risk and uncertainty, while the energy market may continue to throw up surprises, as evidenced by Saudi Arabia’s recent announcement of a sharp cut in production. And one factor we must not forget is the effects of climate change. There are concerns, for example, that the Panama Canal may be forced to reduce the number and draft of ships passing through it due to the drought affecting Central America, which has reduced the availability of water for navigation, thereby impacting the global supply chain.