Commodity prices could keep inflation high, warns World Bank
WORLD 27 April 2024 - 09:07
Financial Times carries an article about sharp falls in commodities which are unlikely to continue, Caliber.Az reprints the article.
Energy and other commodity prices are unlikely to continue to be a major deflationary force in the coming years, according to the World Bank, hampering central banks in their efforts to cut interest rates.
The multilateral lender said in a report on April 25 that the sharp decline in commodity prices over the past two years had come to a halt, as geopolitical tensions tighten supplies and demand for industrial metals and those used in the energy transition continues to grow.
Global commodity prices tumbled 40 per cent between mid-2022 and mid-2023, with oil, gas and wheat among those falling sharply. That helped drive down global inflation about two percentage points over that period, according to the bank.
But over the past year prices have plateaued, according to the World Bank’s index, putting an end to this deflationary pressure.
“Global inflation remains undefeated,” said Indermit Gill, the World Bank Group’s chief economist and senior vice-president. “A key force for disinflation — falling commodity prices — has essentially hit a wall. That means interest rates could remain higher than currently expected this year and next.
“The world is at a vulnerable moment: a major energy shock could undermine much of the progress in reducing inflation over the past two years,” he added.
The bank forecasts that commodity prices will fall as little as three per cent in 2024 and four per cent in 2025. That would still leave prices about 38 per cent higher than they were on average between 2015 and the start of the coronavirus pandemic in 2020.
This slowdown in price falls will do little to quell above-target inflation and creates a problem for central banks wanting to bring down interest rates, according to the report.
“The big deal” was that commodity prices were staying high while global growth slowed, Ayhan Kose, the World Bank Group’s deputy chief economist, told the Financial Times.
This divergence marked the start of “a new era”, Khose added, noting that the last time this happened was in the wake of the 2008 global financial crisis.
While most commodities are still set to come down in price but at a slower pace, according to the bank’s forecasts, copper is set to rise as the energy transition spurs demand for the metal, which is essential for manufacturing electric cars and upgrading the electricity grid.
Double-digit growth in global energy investment “brings additional pressure on the demand side, keeping prices higher”, said Khose. Demand in China had also been more robust than expected, he added.
The report also forecasts that tensions in the Middle East will push up the cost of gold — seen as a haven in times of conflict — and oil. The bank expects the price of Brent crude oil to average $84 a barrel this year, slightly higher than last year’s average, and $79 in 2025. On April 25, Brent was trading at about $88 a barrel.
Commodity prices could be even higher if conflict in the Middle East escalates, however, the report added. “Those tensions bring a certain premium, especially in the context of the price of oil, and also bring more frequent price movements,” said Khose.
The bank forecasts that, if the conflict intensifies in a worst-case scenario, oil prices could blast through $100 per barrel this year. Such a sharp rise would push up overall global inflation nearly one percentage point, it said.
Caliber.Az
1
|
High time to declare US ambassador persona non grata Mr. Libby, take your suitcase and leave for Washington
05 May 2024 - 12:06
|
2
|
Sports & Lake Urmia as tools in fighting for Azerbaijani national identity in Iran Identity struggles: Sports & environment
07 May 2024 - 16:46
|
3
|
West destabilising situation in Georgia Security, impunity for (foreign) agents
05 May 2024 - 17:28
|
4
|
Double standards and Michel's confession Europe's hypocrisy
05 May 2024 - 11:18
|
5
|
Armenian priests peddling false narratives Unmasking revanchist rhetoric
05 May 2024 - 14:57
|
China-Russia partnership alarms West amid Ukraine war
Caliber.Az on YouTube08 May 2024 - 16:22
Michelle Obama: the game-changer in the presidential race?
Biden's replacement, Trump's challenger08 May 2024 - 16:12
Türkiye successfully tests AKINCI strike heavy UAV with domestic ammo & electro-optical system
PHOTO/VIDEO08 May 2024 - 16:06
Azerbaijani-Bulgarian trade turnover exceeds $150 million
Statement by deputy economy minister08 May 2024 - 15:53
Diplomatic pressure on Israel mounts amid Gaza war
No exit strategy08 May 2024 - 15:39
Russia welcomes upcoming meeting between Azerbaijani, Armenian FMs in Kazakhstan
08 May 2024 - 15:36
28-year chapter of sorrow that shall never again darken our history's pages
Occupation of Shusha as testament to Armenia's crimes08 May 2024 - 15:21
Armenian National Security Service summons revanchist archbishop
08 May 2024 - 15:03
Azerbaijan plays key role in diversifying Bulgaria's gas supply - President Rudev
08 May 2024 - 14:47
Azerbaijani, Israeli officials discuss ongoing developments in Caucasus, Middle East
08 May 2024 - 14:44
President Aliyev: Azerbaijan to position itself as a provider of green energy to Europe
08 May 2024 - 14:31
Azerbaijan State Tourism Agency: COP29 – biggest event due to number of participants
08 May 2024 - 14:17
Azerbaijan to hold Fintex Summit-2024
08 May 2024 - 14:03
Israeli offensive on Rafah would break international law, UK minister says
08 May 2024 - 13:51
US increases its forecast for Azerbaijan’s oil production
08 May 2024 - 13:37
Türkiye holds Operation Mahzen-39
VIDEO08 May 2024 - 13:23
IAEA discusses implementation of failed 2023 agreement with Iran
08 May 2024 - 13:09
Yerevan must grasp that Armenia's sovereignty and future are at stake
Kazakh pundit assesses peace chances in South Caucasus08 May 2024 - 12:54
Organisation of Islamic Cooperation supports Azerbaijanis expelled from Armenia
08 May 2024 - 12:42
Poland hosts joint exercise Astral Knight-24
PHOTO08 May 2024 - 12:30
Russian peacekeepers' last convoy leaves Karabakh
VIDEO08 May 2024 - 12:25
Azerbaijan to export five billion cubic metres of gas to Europe
08 May 2024 - 12:17
Bridging divides and building alliances: From Kenya to Azerbaijan
Article by Nation08 May 2024 - 12:05
Baku-Bratislava: Advancing progress through strategic partnership
Fortifying economic bonds08 May 2024 - 11:53
President’s rep: Azerbaijan, Armenia reach agreement on COP29 climate conference
08 May 2024 - 11:39
Official welcoming ceremony of Bulgarian president held in Baku
08 May 2024 - 11:27
Armenia's Pashinyan embarks on visit to Moscow
08 May 2024 - 11:26
Paris Olympics 2024: Bedbugs, QR codes and Macron's unkept promises
Challenges behind celebration08 May 2024 - 11:13
UN World Food Program to seek funds to scale up humanitarian aid in Somalia
08 May 2024 - 10:58
Azerbaijani PM meets with Turkish parliamentarian Fuat Oktay
08 May 2024 - 10:52
"Azerbaijan and Kenya join forces ahead of COP29"
Article by Ambassador Sultan Hajiyev08 May 2024 - 10:45
Abandon the doom and gloom narrative around Azerbaijan and Armenia
Article by The Guardian08 May 2024 - 10:31
Armenian Apostolic Church: Sowing seeds of hatred instead of cultivating peace
Will Yerevan opt to cling to historical myths?08 May 2024 - 10:18
Russian hacker sanctioned by UK, US, Australia
08 May 2024 - 10:04
Poland urges EU for joint defence against Russian missiles
08 May 2024 - 09:52
Earthquake hits Armenian-Azerbaijani border
08 May 2024 - 09:40
UN trains Azerbaijani officials for Enhanced Climate Transparency Reporting
Ahead of COP29/PHOTO08 May 2024 - 09:27
Damage to Ukraine's energy infrastructure estimated at over $1 billion
08 May 2024 - 09:14
Elbit’s new Red Sky air defence system goes public with first customer
08 May 2024 - 09:00
China, Russia to fill vacuum of US military withdrawal from Niger
Analysis by Army Technology08 May 2024 - 07:21