The head of the International Monetary Fund (IMF) believes that the rate of inflation worldwide may be approaching its peak. However, she cautioned that increased consumer pressure was a real prospect. A breakdown in the world’s supply networks is one of these factors, which also includes growing living expenses.
The Rate of Inflation Throughout the World May Soon Reach Its Pinnacle
The IMF’s Managing Director is Kristalina Georgieva. She commented that the recent global increase in consumer prices seemed to be reaching its pinnacle. However, since the Covid breakout, the Ukraine conflict in Russia has made the worldwide surge worse.
“It is extremely plausible that we are peaking,” she remarked. She said this while speaking with Bloomberg TV at the Cop27 climate conference in Egypt.
She added that people now recognize that central banks are collaborating closely to fight inflation. However, she emphasized that the anchor would be lost if they failed, endangering price stability and economic expansion.
The fund’s director did, however, issue a caution. According to her, disjointed global supply chains for manufacturing might make it more difficult to get inflation back to pre-Covid levels.
She said it would be more challenging to reduce inflation to 2%. Since consumers no longer base their economic choices on price, she said that deflation is brought on by interruptions in supply [and] demand and a shifting cost structure.
She stressed the significance of the supply chain’s security. Prices would increase if supply chains diversified, she said.
In its most recent annual assessment of the status of the global economy, the IMF issued a forecast. According to the estimates, global inflation will peak at 9.5% in the q3 of 2022. Then, by 2024, it will gradually decline to roughly 4.1%.
Unlike Previously Believed, Inflationary Pressures Could Be More Persistent
Investors in financial markets throughout the world are seeking indications that global inflation has peaked. This is because most significant central banks will likely cease using interest rate increases to counteract rising living costs.
According to researchers, inflationary pressures may be more long-lasting than previously thought. This is because supply chains for firms have been reconfigured globally and because of geopolitical concerns.
Companies attempt to get their products from close-by places, regardless of whether it costs more. This was a direct outcome of the significant disruptions brought on by the Covid epidemic.
According to the Bank of England’s prediction, inflation in the UK was expected to peak in October at slightly under 11%. From there, a sharp drop is likely to occur during the next 12 months.
The United Kingdom saw its highest rate of inflation since 1982 in September, when it rose to 10.1%. Expenditures on energy and food account for the bulk of this rise.
According to Threadneedle Street, the supply chain’s conditions seemed to have improved recently. However, consumer spending was declining due to the worldwide economic slump.
As a result, the cost of shipping products internationally has been reduced in recent weeks. The price of gas and oil has reduced on wholesale markets as well.