Return To Target Likely To Be Gradual

Global inflation has been sticky in 2024 as a number of cost factors that brought inflation down have turned or stabilised but demand pressures also persist. OECD core inflation was steady at 6.4% y/y in March while G20 headline remained at 6.9% above December’s 6.5%. While supply chains look to be continuing to put downward pressure on inflation, factors impacted by geopolitics are swinging from inflationary to disinflationary month to month.

• April CPI data are still being released but the US saw moderation to 3.4% from 3.5% and core to 3.6% from 3.8%. The euro area CPI held steady at 2.4%.
• Non-Japan Asia ex China April core CPI continued trending lower to 1.9% from 2.0% but headline was steady at 3.6% in April. While China’s inflation remains very low, headline and core picked up in April to 0.3% y/y and 0.7% respectively.
• April saw added price pressures from oil, food, metals & ores but downward ones from supply-chains, shipping costs and wool. But there will be lags from these price developments that will feed into products over coming months. The mixed picture is going to add to concerns that bringing inflation down the last part towards targets will be difficult.

Source: MNI - Market News/Refinitiv/IMF