Inflation is expected to remain high in most of the world during 2022, due to rising food and fuel prices and supply chain disruptions, Moody’s said Monday.
The global rating agency said in a report that it anticipates inflation to moderate in the second half of 2023.
“We forecast inflation to stay above pre-pandemic rates in 2022, driven by both demand and supply factors; however, the Russia-Ukraine military conflict has exacerbated supply-side pressures,” the report said.
“Assuming the global economic impact of the conflict is contained, normalization of activity and supply chains, and monetary policy tightening that curbs demand-side pressures will support a gradual easing in inflation back toward pre-pandemic rates in the second half of 2023,” it added.
Moody’s warned that if inflation persists for even longer, it would increase social and political risks further.
“Rising food and energy prices – which are nondiscretionary consumption items, and represent a higher share of consumption for low-income households – contribute to rising social tensions and could add to spending pressures as governments attempt to mitigate the impact of higher prices on the public,” it said.
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