Global inflation nears peak and stabilizes next year, IMF says

The current spike in inflation hitting countries around the world will peak in the coming months and stabilize by the middle of next year, the IMF predicted on Wednesday.

“Headline inflation is expected to peak in the final months of 2021, with inflation expected to return to pre-pandemic levels by mid-2022 for advanced economies and emerging market groups of countries, and with upside risks, ”the Washington statement said. the crisis lender said in a chapter of his new World Economic Outlook.

The full report will be released next Tuesday and updates the IMF’s estimates made in July, when it predicted inflation would return to pre-pandemic levels at some point next year.

Prices around the world have soared throughout this year as economies rebound from the sharp contraction caused by the Covid-19 pandemic in 2020.

In its latest forecast, the IMF pointed out that commodity shortages, supply chain grumbles and a rebound in economic activity fueled by accommodative central bank policies and pent-up demand are boosting inflation.

For richer countries, “headline inflation will peak in the last few months of 2021 and decline to around 2% by mid-2022,” the IMF said.

Among emerging and developing economies, the institution expects inflation to drop to 4% from the peak of 6.8% it will reach later this year.

However, the IMF cautioned against the uncertainty of its forecast and said governments should be on the lookout for “a perfect storm of inflation risks that could be relatively benign when viewed individually but which in turn. materializing together, could lead to significantly higher inflation than expected.

In a speech on Tuesday ahead of the outlook release, IMF Managing Director Kristalina Georgieva cited inflation as one of the hurdles facing the global recovery from the Covid-19 slowdown, prompting the lender to revise its growth forecast for this year “slightly” down.

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