Global battle against inflation ‘largely won’

High inflation has mostly been defeated around the world, the International Monetary Fund said Tuesday, providing a surprisingly upbeat assessment on prices after warning only three months ago that progress on reducing inflation had stalled.

High inflation has mostly been defeated around the world, the International Monetary Fund said Tuesday, providing a surprisingly upbeat assessment on prices after warning only three months ago that progress on reducing inflation had stalled. “It looks like the global battle against inflation has largely been won, even if price pressures persist in some countries,” the IMF said in its latest World Economic Outlook. “In most countries, inflation is now hovering close to central bank targets… The decline in inflation without a global recession is a major achievement,” the fund added, cautioning, however, that “vigilance remains key.” “Inflation in services remains too elevated, almost double pre-pandemic levels,” it said, noting that a few developing economies have started to raise interest rates again following a resurgence of inflation. The IMF thinks global inflation will slow to 5.8% this year — marginally below its July forecast of 5.9% — and fall to 3.5% by the end of next year, which is slightly below the average during the two decades before the pandemic. The rosy outlook on consumer prices comes just weeks before the US election, with inflation a key issue for voters. Americans consistently cite the economy and cost of living as being top of mind, with many feeling that their incomes are not stretching as far as they used to. According to US Consumer Price Index data, goods and services cost about 20% more in August than in February 2020, just before the global spread of Covid, even though the pace of annual price rises has cooled significantly, approaching the Federal Reserve’s 2% target.