Inflation is very far from the peaks reached in 2022, but it clearly shows that it has stagnated in recent months.
Inflation in the world has stagnated, and that is the best case scenario, because there are even signs that it could be timidly picking up in some nations, which represents a risk for the world.
According to the most recent minutes of the Fed’s September meeting, it is noted that the majority of participants believe that a further increase in the rate would be appropriate, although some others believe that it is already at an adequate level.
Fed members agree that proceeding should be done carefully: The decision to leave the rate unchanged gives the US central bank more time to evaluate the data and make a better decision on interest rates. Specifically, to know if the disinflationary process continues. The Fed believes that the current level of rates is restrictive and is having the desired effect on the economy.
But there are signs that inflation is no longer going down; Although it has already moved away from the maximum points it reached in the middle of last year, it is also far from the objectives of the vast majority of central banks. If we are strict, in many cases inflation is still at double the goals that monetary institutions have.
Another compelling example. In China, the Consumer Price Index increased by 0.2% last September and was unchanged year-on-year during the ninth month of the year. Markets expected it to rise 0.3 percent in the month and 0.2 percent at an annual rate.
Food and clothing prices were the factors that most pressured price growth during the ninth month of the year.
The inflation trend appears to be global. In all countries, from Europe to South America, the same phenomenon is observed: price readings lower than those of a few months ago, but with little potential for regression.
Inflation is also stagnating in Mexico
In the case of Mexico, the trajectory is also one of stagnation in general prices. September inflation showed a reading of 4.45 percent annually.
Without a doubt, there is progress in the fight against inflation since, as we know, this indicator almost reached double digits: very close to 11 percent annually.
The inflation rate is above Banxico’s goal, which is 3% and with a minimum of 2% and a maximum of 4%
Inflation in the food sector is still at very high levels. Both in rural and urban areasDuring September, the cost of the basic food basket rose 6 percentaccording to central bank figures.
The basic complementary basket includes, in addition to food, other products and services necessary for life, such as hygiene, cleaning, transportation, education and health products.
It has even been detected that, although food is becoming more expensive in rural and urban areas, the price of other basic generic products has risen more sharply in small towns in Mexico.
Inflation is very far from the peaks reached in 2022, but it clearly shows that it has stagnated in recent months.
The risks of stagnation
Analysts clearly point out that stagnation in the trajectory of inflation is risky in the sense that a rebound could push ceilings higher than what happened last year. Another risk is the fact that inflation becomes chronic.
Even, Among some of the analysts themselves, the debate continues over whether central banks should temporarily modify their inflation targets upwards.to allow themselves greater margins of maneuver and put pressure on prices to fall and break the new inflationary target, which in fact would bring prices to levels close to the current targets.
Of course, the risks deepen further with the current geopolitical context, in which international prices of oil and other commodities could rise again due to the Russia-Ukraine, Israel-Hamas wars, as well as the China-United States trade conflict. .
Of course, any disproportionate increases in the price of oil will further harm the global economy, which is not good for stock markets with already high valuations. Increases in oil prices could further stoke inflation fears and worsen stagflation in oil-importing countries.among other effects.
As we see, the global context continues to deteriorate gradually, but in a sustained manner, when the global economy has barely emerged from the pandemic and is still suffering from its effects.
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