In its latest release of global economic expectations, the World Bank forecasts that overall inflation in 2013 will remain relatively moderate. Global inflation is forecast to fall in the 3.5 to 4 percent range for 2013. This estimate of future inflation is very similar to the observed global inflation in 2012 of 3.9 percent, as reported by the World Bank.
Recent inflation in developing countries is reported to be an annualized 5.1 percent, based on observations during the fourth quarter of 2012. These same developing countries are estimated to incur inflation of about 6.3 percent in 2013. As a result of increasing food prices and a higher allocation of the overall inflation measurement toward basic food staples, these developing countries are expected to experience an overall higher level of inflation than the global average.
Aggregate increases in global food supply prices are possible at rates above the overall inflation rates. As the prices for basic food commodities increase, these higher costs will likely work their way through various channels of the food supply. For example, grain price increases generally result in increases in beef, chicken and other consumers of these grains.
The overall estimate of global inflation for 2013 could have significant variation — upward or downward. A worsening of the sovereign debt crisis in the Euro area and the effects of the "fiscal cliff" and debt ceiling negotiations in the U.S. could introduce volatility to the estimate. Shocks to global petroleum supplies, supply lines or basic food commodity sources might also result in a material variation away from the predicted inflation level.
Looking beyond 2013, future global inflation is expected to gradually increase as aggregate consumer confidence improves, resulting in modest increases in consumption. If supply chains are not able to accommodate this increasing demand for various materials and commodities, specific prices could temporarily escalate.
Overall, the picture for global and U.S. inflation remains fairly moderate. Wage pressures appear subdued for most U.S. domiciled occupations and average aggregate input prices are not expected to significantly increase anytime soon. As a result of ongoing moderate inflation rates, interest rates should remain in approximately the current range.
Kirby Brown is the CEO of Beneficial Financial Group in Salt Lake City.
- Want to land your dream job? 4 must-do things
- Lehi supplement firm launches research lab
- University Place construction timeline released
- The few, the proudly employed, the coding...
- Why the West is the best place for...
- Monarchs say Fairpark deal is dead, team...
- LDS author analyzes benefits of inexperience...
- Taylor Cotterell: Time for a job change?...
- Defying GOP, Obama vetoes Keystone XL... 51
- FCC approves 'net neutrality' rules for... 26
- The few, the proudly employed, the... 7
- Monarchs say Fairpark deal is dead,... 3
- About 2,000 rally against right-to-work... 2
- University Place construction timeline... 2
- US Sen. Rubio: Education must get... 1
- Colorado fracking opponents plan drive... 1