WASHINGTON—The International Monetary Fund said on Wednesday that headline consumer price inflation should peak this fall and recede to pre-pandemic levels by mid-2022, but risks remain that shortage-driven inflation spikes could prove more persistent, unanchoring expectations. The IMF’s baseline forecasts for advanced economies shows headline inflation peaking at 3.6 percent in the fall of 2021 and declining to about 2 percent by mid-2022. Emerging market and developing economies will see inflation declining to about 4 percent next year after peaking at 6.8 percent this fall. The staff analysis was released as an analytical chapter of the World Economic Outlook titled “Inflation Scares”. “Sharply rising housing prices and prolonged input supply shortages in advanced and developing economies and continued food price pressures and currency depreciations in emerging markets could keep inflation elevated for longer,” the IMF said in the report. Fund staff ran simulations to include prolonged supply disruptions in certain …
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