{"id":2915,"date":"2009-12-21T12:34:56","date_gmt":"2009-12-21T12:34:56","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2915"},"modified":"2025-03-27T15:48:57","modified_gmt":"2025-03-27T15:48:57","slug":"imf-inflation-forecasts-too-low","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2915","title":{"rendered":"IMF inflation forecasts too low"},"content":{"rendered":"<p>In its October <a title=\"http:\/\/www.imf.org\/external\/pubs\/ft\/weo\/2009\/02\/index.htm\" href=\"http:\/\/www.imf.org\/external\/pubs\/ft\/weo\/2009\/02\/index.htm\" target=\"_blank\"><em>World Economic Outlook<\/em><\/a>, the IMF forecast a rise in consumer price inflation in the advanced economies from 0.1% in 2009 to 1.1% in 2010. The increase is likely to be much larger barring renewed commodity price weakness.<\/p>\n<p>The first chart shows the annual change in the consumer price index (CPI) for the Group of Seven (G7) major countries &ndash; a proxy for advanced economies &ndash; together with the 12-month movement in the IMF&#8217;s world commodity export price index. The latter is projected forward assuming that commodity prices stabilise at their October level (the latest reading of the IMF index). The relationship suggests a rise in G7 annual inflation to at least 2% in early 2010 and an average for the year well above the IMF&#8217;s 1.1% forecast.<\/p>\n<p>Its projections for emerging and developing countries are also questionable. Spare capacity is limited in many emerging economies and consumer price indices typically assign a higher weight to commodities than in developed countries. Yet the IMF forecasts a decline in average CPI inflation for the group to 4.9% in 2010 from 5.5% in 2009.<\/p>\n<p>Projected falls in Chinese and Indian inflation &ndash; to 0.6% and 7.4% respectively in 2010 &ndash; are particularly implausible. Chinese prices are likely to accelerate in the wake of 30% growth in the M2 money supply in the year to November while the Indian forecast implies a sharp reversal of the current rising trend&nbsp;&ndash; second chart &ndash; despite still-loose monetary policy.<\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" style=\"width: 680px;\" src=\"\/storage\/2009-12-21-1-g7consumerprices.gif?__SQUARESPACE_CACHEVERSION=1261400103320\" alt=\"\" \/><\/span><\/span><\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" style=\"width: 680px;\" src=\"\/storage\/2009-12-21-2-indiaconsumerprices.gif?__SQUARESPACE_CACHEVERSION=1261400125742\" alt=\"\" \/><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In its October World Economic Outlook, the IMF forecast a rise in consumer price inflation in the advanced economies from 0.1% in 2009 to 1.1% in 2010. The increase is likely to be much larger barring renewed commodity price weakness. The first chart shows the annual change in the consumer price index (CPI) for the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2915","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2915","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2915"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2915\/revisions"}],"predecessor-version":[{"id":5224,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2915\/revisions\/5224"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2915"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2915"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2915"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}