![]() This move is expected to help cool domestic demand and ease price pressures. As the inflation rate is trending higher than the 2.0% to 6.0% range targeted by the Reserve Bank of India, in August 2022 India’s central bank raised the key interest rate by 50 basis points to 5.4%. Higher energy and food commodity prices, as well as increasing consumption in rural areas are contributing significantly to the higher inflation rate. Inflation in India is forecast to reach 7.0% in 2022.High volatility in the energy and commodities markets remain among the biggest risks that could fuel additional price increases in Q4 2022. On the other hand, prices of entertainment services, used cars and big-ticket items have moderated, due to the cooling of consumer demand and rising financing costs. ![]() Inflationary pressures remain high due to the rising prices of fuel, utilities and food products. Inflation in the UK is forecast to reach 8.6% in 2022.Lower demand for materials from the construction sector, stabilisation of domestic supply chains and efforts to strengthen price controls of major commodities are helping to stabilise price growth. Inflation in China is forecast to reach 2.5% in 2022 and is expected to remain moderate by global and regional standards.The US Federal Reserve is expected to continue to tighten its monetary policy to tame inflation. However, higher food prices and housing costs continue to add to the inflationary pressures and erode the purchasing power of consumers. The inflation rate is reaching a peak as lower prices of fuel, natural gas and big-ticket items help to cap price increases. Inflation in the US is forecast to increase to 8.0% in 2022.Given the faster increase in prices during Q2 2022, forecasts of 2022 inflation for most key economies are revised upward compared to predictions made in the previous quarter. Inflation in advanced economies reaches levels not seen since the 1980s Note: data from 2022 onwards are forecasts Source: Euromonitor International Macro Model (updated 15 August 2022) Global Inflation Baseline Forecast, 2019-2023 This is expected to particularly increase inflationary pressures and undermine economic growth in the Eurozone. Countries with greater dependency on energy imports, such as Germany, Spain and Italy, will feel higher inflationary effects in 2022-2023 in the event that energy price growth accelerates. ![]() Therefore, baseline inflation forecasts are likely to remain elevated in 2023.Īdditional supply chain disruptions and potential energy price shocks remain among the key risks, and could accelerate price growth in Q4 2022 and beyond. Supply chain issues due to the war in Ukraine and China’s zero COVID-19 policy are also likely to persist in 2022 and at least the first half of 2023. Central banks are forced to tighten monetary policy to counteract inflation, although such policies are likely to intensify the global economic slowdown. Changes in monetary policy and a rise in interest rates in many key economies are also expected to limit consumer purchasing power. However, high inflation continues to erode consumer purchasing power as price growth exceeds consumer income growth. Under the baseline scenario, global inflation is now predicted to reach 8.7% in 2022 and then fall to 5.3% in 2023. Stabilisation of commodity prices and lower fuel costs are the main factors helping to cap the inflation surge. After a stronger rise in surging energy and food prices than expected in Q2 2022, global inflationary pressures have eased slightly in Q3 2022 as consumer price and manufacturer price data suggest that inflation may have reached a peak.
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