This page looks at the profitability of businesses. We see the close correlation between the inflation (here the producer price index) and global corporate earnings, where higher prices usually lead to higher earnings (or vice versa). The right chart illustrates the pass-through of input prices to margins. The input-output price line is from the Purchasing Managers' Index survey sub-components and used to show expectations of costs and output prices. However, this chart shows that profit margin still expands when input prices are expected to rise faster than output prices. This is because not all businesses are sensitive to input cost increases and some companies, especially those with a large fixed costs, can still expand their profit margin when businesses improve.