Inflation Peaks This Fall This Year

The International Monetary Fund or IMF said Wednesday (6/10) that inflation in the prices of key consumer goods will peak this fall. Inflation should drop to pre-pandemic levels by mid-2022, but the near-term inflation boost remains.

The IMF’s baseline forecast for developed economies shows inflation peaking at 3.6% in autumn 2021 and declining by around 2% in mid-2022. Inflation in developing countries will fall by around 4% next year, after peaking at 6.8 % this fall.

The analysis was released as an analytical chapter of the World Economic Outlook entitled “Inflation Scars.”

The IMF said recent headline inflation was driven by delayed demand and a build-up of savings caused by budget and monetary stimulus. This causes the prices of goods to rise rapidly, and disrupts supply chains.

The 40% increase in world food prices since the start of the pandemic has hit low-income countries hard.

Wages increased, especially in sectors that were hit hard by the COVID-19 pandemic, such as recreation, hotels and retail stores in some developed countries including America. [ps/ka]

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