Evidence suggests that global inflation is no longer transitory as supply-side bottlenecks remain persistently tight, warned economists and researchers at the Institute of International Finance (IIF).
According to them, production gaps continue to narrow and could turn positive next year in advanced economies, which will surely continue to add pressure on demand.
Inside an analysis, entitled “Perfect storm of world inflation”, they explained that it is to be expected that the limitations in the global supply chain of inputs will persist, which will continue to contribute to raising the prices of energy and raw materials even during the year. incoming.
In the analysis, led by IIF senior researcher Samuel Larussa, they anticipated that in the face of these pressures, world inflation will continue to climb. Even when they do not incorporate specific expectations in the analysis, expectations of the International Monetary Fund (IMF) can be taken, which at the end of October estimated that global inflation will register a variation of 4.8% this year; the highest since 2007.
According to IIF experts, the general price escalation between emerging markets will be much greater, and according to the IMF it will fluctuate around 5.5 percent annually.
The IIF maintains that inflationary pressure began to build in 2016, when a process of deglobalization began.
According to the observation of the IIF, the inflation that emerging economies are currently experiencing, results from the product gaps that begin to be positive, that is, to recover; They also respond to an upward change in inflation expectations and the exchange rate depreciation that affects the prices of imported merchandise.
In the document, the IIF highlighted that a factor of concern among emerging countries is also the persistence of the pressure that is being observed in core inflation, which in the case of Mexico the products that include it represent 70% of consumption.