Sign up for our newsletter to receive regular updates on global inflation rates. Each morning, you’ll receive a myFT Daily Digest email summarizing the latest news on global inflation.
The United Kingdom finds itself in a less fortunate position compared to other countries, as inflation is slowing down at a higher level and at a much slower pace. Goldman Sachs provides a chart illustrating the significant reduction of global price pressures this year, with expectations of continued easing. Another chart breaks down the figures for 2023 across different regions. Surprisingly, even emerging markets, excluding China, which is experiencing deflation, have a lower core inflation rate than the UK, with June’s rate at 6.9 percent.
Goldman’s economists, Joseph Briggs and Giovanni Pierdomenico, discuss this global core inflation slowdown in their recent report titled “Anatomy of a Global Core Inflation Slowdown.” The report highlights several key points:
1. Global core inflation has experienced a sharp decline. Developed market (DM) economies have seen core inflation, which excludes food, energy, alcohol, and tobacco, drop from a peak pace of 6% to 4% today. Emerging markets (EMs) have also retraced more than half of their inflationary overshoot.
2. Detailed analysis reveals even more positive trends. Trimmed core inflation in major DMs has slowed to just over 2%, and the “early hiker” economies that are further along in their hiking cycles are experiencing a rapid pace of core inflation slowdown.
3. The core drivers of this inflation slowdown are consistent across countries. Slower core inflation in goods, excluding vehicles, accounts for a significant portion of the broader slowdown in almost all economies. Additionally, vehicles inflation has lowered global core inflation by over 1pp compared to its peak. Core services, excluding shelter, have also experienced meaningful cooling in most countries (excluding Europe) due to labor market rebalancing and wage growth.
4. The expected disinflationary forces, such as improvements in supply chains and slower wage growth, are now having a strong impact on core inflation. Recent data releases show negative inflation surprises, further supporting the view that these forces can continue to drive core inflation lower. Consequently, Goldman Sachs is confident that global core inflation will fall below 3% by 2024.
However, the crucial question remains: Will inflation continue to cool off and return below the 2% target set by most central banks? If not, the upcoming rate hiking pause may only provide temporary relief rather than marking the peak of the economic cycle.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
