My subscription
My Subscription All Publications

Inflation surge not just a food and energy story

Higher food and energy prices go some way to explaining the rise in headline inflation rates across the emerging world, but this is only part of the story. Core inflation has also jumped in many EMs, especially in Emerging Europe and Latin America. This will keep central banks in both regions in tightening mode. With inflation in Asia and South Africa more subdued, tightening cycles there will be more gradual. EM Drop-In (17th May): Do current EM debt strains point to a repeat of the kinds of crises seen in the 1980s and 1990s? Join our special briefing on EM sovereign debt risk on Tuesday. Register now.
Kimberley Sperrfechter Assistant Emerging Markets Economist
Continue reading

More from Emerging Markets

Emerging Markets Economics Update

EMs stepping up to support currencies

A handful of EM central banks have ramped up FX sales to provide support to weakening currencies over the past couple of months. And with inflation high and the US dollar likely to strengthen further, others could follow suit. FX intervention is unlikely to prevent further depreciation, but central banks with healthy FX reserve buffers may have some success in slowing the pace of currency falls. In view of the wider interest, we are also sending this Emerging Markets Overview Update to clients of our FX service.

24 June 2022

Emerging Markets Economics Chart Book

High inflation to keep central banks in tightening mode

Having surged in recent months, there are some tentative signs that EM inflation is nearing a peak. Our measure of aggregate EM inflation was steady at 7.0% y/y between April and May and some indicators of pipeline price pressures have eased. But even so, our aggregate measure is running at its highest rate since 2008 and, even when inflation does fall back, it’s likely to remain well above many EM central banks’ targets for some time. Against this backdrop, most EM central banks are likely to tighten monetary conditions further. Indeed, we generally expect more rate interest rate hikes than most analysts do over the next 12-18 months. Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  

23 June 2022

Emerging Markets Economics Update

EMs, food security and inflation

Shortages of food supplies and surging prices have led some EMs to impose export restrictions on key agricultural products, a trend that threatens to become more prevalent and serve to keep prices elevated and inflation high. Some EMs are also attempting to cushion the impact of higher food prices on household spending by ramping up subsidies. But that will entail significant fiscal costs which in some places isn’t sustainable, notably North Africa. World with Higher Rates - Drop-In (21st June, 10:00 ET/15:00 BST): Does monetary policy tightening automatically mean recession? Are EMs vulnerable? How will financial market returns be affected? Join our special 20-minute briefing to find out what higher rates mean for macro and markets. Register now

16 June 2022

More from Kimberley Sperrfechter

Frontier Markets Monthly Wrap

Three positive stories from frontier markets

There has been plenty of doom and gloom surrounding the outlook for frontier economies over recent months, particularly Sri Lanka and Tunisia. But there are some places where we hold more upbeat views. Frontier economies in the Gulf will benefit from high oil prices, while manufacturing should drive strong growth in Morocco and Vietnam.

12 May 2022

Emerging Markets Economics Update

EM export strength starting to fade

Having surged over the past two years, there are signs that EM exports may now have passed their peak. That will weigh on economic growth, particularly in parts of Asia. EM Drop-In (5th May, 10:00 EDT/15:00 BST): Join Shilan Shah for our latest monthly session on the big macro and markets stories in EMs. This month, Shilan and the team will be talking Russian gas, FX weakness and surging food prices. Register now

4 May 2022

Emerging Markets Activity Monitor

Activity set to weaken as headwinds mount

Many EMs have started the year on a solid footing, but challenging months lie ahead. While high inflation is likely to weigh on consumption, spillovers from lockdowns in China and the war in Ukraine are likely to exacerbate supply shortages and hamper industrial output.

25 April 2022
↑ Back to top