World Consumer Price Inflation to Retreat to Pre-Pandemic Level by Mid-2022, IMF says
What’s new: The International Monetary Fund (IMF) expects global headline consumer price inflation to peak this fall and revert to pre-pandemic levels by mid-2022, but high uncertainty remains in the outlook.
In an analytical chapter of the World Economic Outlook released Wednesday, IMF warned that persistent “inflation scares” could lead to higher inflation expectations, and suggested that appropriate monetary and fiscal policies, accompanied by clear communication, could help to bring down inflation and inflation expectations.
Factors behind the uncertain inflation outlook include the evolution of housing, structural transformation in labor markets, and food prices, the IMF said. Global food prices are up by about 40% since the start of the pandemic, which has bigger impacts especially for low-income countries, where the share of food in consumption baskets is high, the outlook said.
The background: Since the beginning of 2021, headline inflation has risen rapidly in advanced and emerging market economies, driven by rising demand, supply chain disruptions, and rapidly rising commodity prices.
The jump in global food prices to a decade high risks leading to even more expensive grocery bills. A United Nations index of food costs went up by a third over the past year. The recent surge in energy costs is sending prices for farm inputs like fertilizer soaring, threatening higher crop prices or possibly smaller crop planting for next year.
China’s producer price index (PPI) rose 9.5% in August from a year earlier, its fastest rate in 13 years, while the consumer price index (CPI) rose 0.8% last month from a year earlier, following a 1% gain in the previous month.
Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full story in Chinese, click here.
Contact reporter Denise Jia (firstname.lastname@example.org)
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