Thursday, 12 October 2023 16:34

Inflation outlook remains high according to IMF

Written by Coralia Cuellar

Near-term inflation expectations rose sharply in many economies amid the post-pandemic economic recovery and large cost shocks in 2022 (from surprise energy and commodity price hikes and supply chain disruptions).

The rise in expectations was broadly synchronous among professional forecasters, financial markets, households, and businesses. In contrast to, Long-term expectations have remained broadly stable.

According to the Fondo Monetario Internacional (IMF), it is still too early to claim victory in the face of rising inflation. However, it has been improving over the last two years.

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Some respond to the long-term consequences of the pandemic, the war in Ukraine and the increase in geo-economic fragmentation. In the case of El Salvador, it has been on the downside but is holding up because it is not a fuel producer and has to buy it for product manufacturing, as well as other raw material.

Risks to the outlook are more balanced than six months ago, due to the resolution of tensions over the US debt ceiling and decisive action by Swiss and US authorities to contain financial turbulence.

For some IMF experts, this (still) rising inflation will not end until 2025.

 

Translated by: A.M