Global Inflation Pressures Broadened on Food and Energy Price Gains

IMF Blog, January 28, 2022

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Fossil-fuel prices nearly doubled in the past year, boosting inflation, especially in Europe.
Rising food prices have also contributed to higher inflation globally.
Continuing supply chain disruptions, clogged ports, logistics strains and strong demand for merchandise have broadened price pressures, especially in the United States.
Higher imported goods prices have contributed to inflation in some regions, including Latin America and the Caribbean.

Inflation is likely to remain elevated:
- Price gains this year will average 3.9 percent in advanced economies.
- Price gains this year will average 5.9 percent in emerging market and developing economies.
Under the assumptions that inflation expectations remain well-anchored and the pandemic eventually eases:
- Higher inflation should fade as supply chain woes ease, central banks raise interest rates, and demand tilts more toward services instead of goods-intensive consumption.
Commodity price outlooks:
- Oil futures contracts indicate crude prices will rise about 12 percent this year.
- Natural gas prices are indicated to climb about 58 percent this year.
- Such increases for both commodities would be considerably less than their gains last year, and would likely be followed by falling prices in 2023 as supply-demand imbalances ease further.
- Food prices are likely to climb at a more moderate pace of about 4.5 percent this year and decline next year—after a rise of 23.1 percent last year, according to the United Nations Food and Agriculture Organization.

Rising food and energy prices impose heavier burdens on residents of emerging and low-income nations, where food typically makes up a third to half of consumer spending.
The share of food in consumer spending is smaller in advanced economies; for example, food accounts for less than one-seventh of household shopping bills in the United States.

Source: Global Inflation Pressures Broadened on Food and Energy Price Gains (IMF, January 28, 2022).