EM inflation pressures continue to build

Price pressures have continued to strengthen in the emerging world. Our aggregate EM inflation measure jumped from 3.8% y/y in August to 4.2% y/y in September, its fastest pace since early 2016. The rise has occurred across all EM regions and the drivers appear to be broad-based – core, food and energy inflation have all strengthened. The impact of higher oil prices should begin to fade shortly, but headline EM inflation is still likely to increase into mid-2019. As a result, we think the tightening cycles that started this year in many countries have further to run.