Washington, December 25 (QNA) – The American Wall Street Journal, in forecasts attributed to economists, suggested that inflation would return to normal levels for the first time in three years for major economies in the world.
The newspaper pointed out, in its report, that core inflation, which excludes food and energy in a group of economies that suffered from high inflation after the Corona “Covid-19” epidemic, such as the United States, Europe, and many emerging markets, could record an annual rate estimated at By 2.2 percent.
It is expected that inflation levels in the aforementioned countries will approach the goals set by most major central banks in the year 2024, as the Federal Reserve Bank, the European Central Bank, and the Bank of England seek to have the inflation rate at 2 percent.
In this context, Michael Saunders, senior advisor at Oxford Economics, expected inflation to reach 1.3 percent in the last quarter of next year in the euro zone, and 2.7 percent in the United Kingdom, and the newspaper indicated that inflation in the United States will decline. To 2.2 percent according to measurements of the Personal Consumption Expenditures Price Index.
She stated that lower inflation would enhance the purchasing power of families and enable central banks to reduce interest rates.
Saunders attributed the common factors that reduce inflation to food, energy, global commodity prices, and monetary policy, adding that inflation will be faster in returning to the 2 percent target in the euro zone, as a result of the United States and the United Kingdom facing pressures represented by a tight labor market, explaining that labor market pressure The distress will go away, but gradually.
The labor market is tight when the number of jobs is greater than the number of applicants for them, which leads to negotiating higher salaries, and thus continuing labor cost pressures for companies, which negatively affects inflation rates.
The newspaper touched on the reasons that led to the world suffering from inflation, as it stated that in the year 2021, commodity prices rose due to the disruption of global production and shipping, in addition to strong demand due to financial and monetary stimulus.
She also added that the Russian war in Ukraine during the year 2022 led to a rise in the prices of basic commodities, which led to inflation reaching its highest levels in several decades.
She explained that inflation in the euro zone, which suffered from the Russian gas outage, peaked at 10.6 percent in October 2022.
Wall Street also indicated that housing costs led to an increase in service price inflation in the United States, as consumer prices rose by 3.1 percent during November, compared to the previous year, but by 1.4 percent when excluding shelter, adding that the impact is much less in Europe, where owner-occupied housing has been omitted from key inflation measures.
The newspaper went on to say: Unrestricted supply chains led to lower inflation at the end of 2022 and throughout this year, and this is likely to continue next year.
For his part, Neil Dutta, head of economic research at Renaissance Research, said that energy and commodity markets have adapted to the unrest in Ukraine, which helped reduce energy prices and stabilize food costs, adding that these factors would continue to influence inflation. In 2024.
The newspaper reported that labor markets in many major economies began to rebalance this year as well, which led to a slowdown in wage growth, which is the main contributor to service costs, and that this would continue in 2024.
Wall Street quoted Peter Berezin, chief global strategist at BCI Research, as saying, “It can be said that this has already happened in the United States,” adding that wage pressures have eased largely due to the influx of workers into the workforce. The newspaper stressed that the timing and impact in this regard will vary depending on the country.
2023-12-25 09:53:55
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