A closer look at the drivers of EM inflation

A big chunk of the recent rise in headline inflation in EMs has been driven by a jump in energy inflation which will be transitory. But core inflation has also risen in parts of Latin America and Emerging Europe and is likely to prove more persistent. With headline rates in both regions set to remain elevated for some time, central banks there will remain in tightening mode over the coming months.
Kimberley Sperrfechter Assistant Emerging Markets Economist
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November’s PMIs offered tentative signs that the worst of the supply disruption may have passed, but the bigger picture is that manufacturers in the emerging world remain stretched. And while it’s still too early to tell, the Omicron variant could exacerbate existing strains. The upshot is that supply constraints are likely to continue to weigh on industry for some time yet.

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