Inflation became one of the biggest problems of the post-pandemic world. The global economy suffered greatly due to rising prices. Governments, economists, and investors alike have been trying to solve this problem.
After two years of struggling with soaring inflation, analysts seem divided in their forecasts. Some of them think it is last abating, while others predict that prices will surge again. Still, headline inflation is much lower than it was several months ago across major developed economies. It dropped from its multidecade peaks. Recent reports showed that in the U.K., prices are declining at last. But the jobs market remains tight, and that might negatively influence the country’s economy.
Moreover, price pressures are still high. But energy and food prices fell slightly. Policymakers typically try to hinder British inflation by rising interest rates. But such a tactic has a drawback. It might cause an economic recession, and investors prefer to avoid it.
What do the latest reports say about inflation?
It seems inflation is retreating towards the 2% level faster than analysts anticipated. That threshold is most major central banks’ target. According to new surveys, plummeting energy prices contributed to the recent drop in headline inflation.
In Europe, natural gas prices plunged to their lowest level since August 2021. They shaved off more than 85% compared to last year’s high point. Thanks to that, eurozone inflation also fell considerably.
Meanwhile, reports showed that in the United States, inflation jumped by 6.4% in January. That is still the smallest surge since October 2021. The inflation skyrocketed to a 9.1% peak last June in the country.
In China, the post-coronavirus pandemic reopening supported oil prices, causing their rally. However, Brent crude is trading at $83 a barrel. That is still lower by 40% compared to the $139 reached after Ukraine’s invasion by Russia. As Europe’s gas prices also decline, inflation might lower even more. So, that is good news.
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