Global inflation is on a downward trajectory, according to an IMF forecast.  

The IMF forecast notes that global inflation is expected to decline by 1% to 5.8% in 2024, down from a 6.8% estimated annual average in 2023.   

Supply disruptions, geopolitical risks and escalating global conflicts could mean that a victory lap on global inflation might be premature for monetary policymakers

Inflationary pressures could come from a stronger-than-expected labour market, particularly for workers with productive skills. 

US manufacturing is experiencing a manufacturing renaissance as more companies onshore their factories to avoid supply disruptions in the Red Sea.

Global Inflation
Strong workforce

“Inflationary pressures could come from a stronger-than-expected labour market”

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So geopolitical tensions, supply disruptions and buoyant demand for workers with the skill sets could lead to higher wages fanning the flames of higher prices. Food commodity prices continue to rise as global food production faces headwinds from climate change challenges and the ongoing war In Europe’s breadbasket Ukraine. 

Cocoa prices remain sharply higher on concern that an El Nino weather event could undercut global cocoa production. Moreover, cooking oil, olive oil, and sunflower oil are at record highs due to a prolonged drought in Southern Europe.  

Climate change could impact global inflation, worsening geopolitical tensions

Escalating food prices triggered the 2012 Arab Spring revolution.

Could the next conflict be over water?         

Food commodity prices

Food commodity prices continue to rise as global food production faces headwinds from climate change challenges and the ongoing war In Europe’s breadbasket Ukraine

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The monetary tightening policy implemented in 2023 is expected to crush demand and dampen global inflation, according to the IMF report

But countries such as Venezuela,  with the largest oil reserves globally, are projected to see inflation reach 230%—the highest overall.

Poor fiscal discipline, excessive public spending on unproductive activities, and the misallocation of capital led to the debasement of the currency and hyperinflation in Venezuela.

The same story is playing out in Argentina as Annual Inflation soars to 211.4%, the Highest in 32 Years. 

Crypto-friendly Argentina’s president Javier Milei has officially endorsed Bitcoin in legally binding contracts. El Salvador stores part of its reserves in Bitcoin as a shelter against global fiat currency debasement.

“China, the world’s second-largest economy, is contending with falling prices due to property market trouble” – Win Investing

The global inflation story is about the debasement of fiat currency

Perhaps the greatest shift of capital flows in history from public to private assets has just begun.

America, slower economic growth coupled with a softening labour market, could ease inflation, which is forecast to reach 2.6% in 2024. 

Over in Europe, inflation is anticipated to average 3.3% across advanced economies. Today, sinking natural gas prices and low GDP growth keep inflation expectations at bay.

China, the world’s second-largest economy, is contending with falling prices due to property market trouble, which drives about a third of the country’s economic growth. Amid sluggish economic activity, a manufacturing slowdown, and low consumer confidence, inflation is forecast to reach 1.7%.

The IMF report notes that while global inflation risk factors remain, projections suggest that the path towards a 2% target is slow, but going in the right direction.

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