According to Oxford Economics, Latin American countries will be at the forefront of emerging markets regarding inflation deceleration next year.
Producer price pressures in the region will fall “like a stone,” the center said.
“Global commodity price inflation is falling, and by mid-2023, we expect double-digit declines in annual import price inflation,” Gabriel Sterne, head of global emerging markets research at the firm, wrote in a note published Tuesday.
Latin America “will lead the way. Median annual import price inflation is already down to 6%.
Since Latin American countries don’t typically subsidize food as much as their emerging market counterparts, they will be the first to feel the effects, wrote Sterne, who predicted that most of the slowdown in import prices would take about two months to filter through economies.
Price relief will be “most welcome” in the Central and Eastern Europe, Middle East, and Africa region, given the proximity of Russia and Ukraine and the fact that food and fuel have a higher weight in consumption baskets than other regions.
Emerging economies in Asia have the most food subsidies, meaning they have been less affected by inflation when it was rising, but will also be slower to see relief as commodity prices fall, Sterne wrote. Still, the global downturn “will alleviate the risk of prolonged inflation.”