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consumer price inflation

Is inflation really gone for good?

Jongrim Ha's picture
Emerging market and developing economies have achieved a remarkable decline in inflation since the mid-1970s. In addition, inflation movement up or down has become increasing synchronized across the countries of the world. These developments have been supported by long-term trends such as countries’ widespread adoption of robust monetary policy frameworks and the strengthening of global trade and financial integration.

However, continuation of low and stable emerging market and developing economy inflation is by no means guaranteed. If the wave of structural and policy-related factors that have driven declines in inflation loses momentum, elevated inflation could re-emerge.

Furthermore, if the global inflation cycle turns up, emerging market and developing economy policymakers may find that keeping inflation low and stable may become as a great a challenge as getting there in the first place. To insulate economies from the impact of global shocks, options include strengthening institutions, including central bank independence, and establishing complementary fiscal policy frameworks.

Read more on the topic in the January 2019 Global Economic Prospects.
 
Emerging market and developing economies have achieved a significant decline in inflation since the mid-1970s, with median annual national consumer price inflation down from a peak of 17.3 percent in 1974 to about 3.5 percent in 2018. Declines in inflation over recent decades have been broad-based across regions and country groups.
 
Median Consumer Price Index (CPI), by country group

Prospects Daily: Euro Area services PMI rises; Brazil’s industrial production slows; Philippines’ 2012 inflation improved

Global Macroeconomics Team's picture

Financial Markets…The Standard & Poor’s 500 Index added 0.1% in Friday morning trade and the dollar weakened 0.2% versus the euro after a U.S. Labor Department report showed a slightly slower than expected employment growth in December. The S&P500 has advanced 4.1% this week, gearing for its largest weekly gain in 13 months.

Prospects Daily: Year-to-date global corporate bond sales rose to $3.43 trillion

Global Macroeconomics Team's picture

Financial Markets…Year-to-date global corporate bond sales rose to $3.43 trillion, already surpassing 2011’s full year total of $3.29 trillion, as further stimulus from global central banks pushed yields to record lows. Funding costs for the riskiest to the most creditworthy corporates are plunging as the persistent low-yield environment spurred unprecedented investor demand.

Prospects Daily: US treasuries gained and the benchmark 10-year bond yield edged down

Global Macroeconomics Team's picture

Financial MarketsUS treasuries gained and the benchmark 10-year bond yield edged down 1 basis point to 1.66%, after rising as high as 1.7% earlier, while the 30-year bond yield slid by 2 bps to 2.83% in early Friday session after a government report on wholesale price in September showed domestic inflation remained muted.

Prospects Daily: European stocks slipped on Friday with the benchmark index falling to a three-week low

Global Macroeconomics Team's picture

Financial Markets…European stocks slipped on Friday with the benchmark index falling to a three-week low as early optimism on Spain’s new austerity measures was short-lived.

Spanish 10-year bond yield rose back above 6% amid uncertainty over its troubled banks before stress test results, fading optimism on the country’s debt cutting plan, and a looming Moody’s rating review which may cost the country its investment grade rating. 

Prospects Daily: European shares and euro continue to slump

Global Macroeconomics Team's picture

Important developments today:

1. European shares and euro continue to slump as Moody’s cuts the rating outlook for Germany, the Netherland, and Luxembourg

2. Output in the Euro Area contracts for the sixth month in July