The International Monetary Fund (IMF) has warned that inflation is expected to remain elevated until 2025, despite recent declines in energy prices and supply chain disruptions. In its latest World Economic Outlook, the IMF predicts global inflation to reach 6.9% this year, which is 1.8% down when comparing it from 8.7% of last year. However, IMF expects inflation to remain above target in most advanced economies (including US and Euro Area, including Germany, France, Finland and more) until 2025, due to persistent core inflation pressures.
The IMF attributes the high inflation to a number of factors, including the war in Ukraine, supply chain disruptions, and strong demand. The war in Ukraine has caused energy prices to soar, while supply chain disruptions have made it more difficult and expensive to produce and transport goods. Strong demand, particularly for goods, has also contributed to higher prices.
The IMF has urged central banks to raise interest rates aggressively in order to bring inflation down. However, it has warned that this could lead to a slowdown in economic growth.
What does this mean for businesses and consumers?
Businesses can expect to face higher costs due to inflation. This could lead to higher prices for consumers and lower profits for businesses. Consumers can expect to pay more for goods and services, and may have to cut back on spending.
What can businesses and consumers do?
Businesses can try to reduce costs by renegotiating contracts with suppliers and finding ways to improve efficiency. They can also pass on some of the higher costs to consumers, but they will need to be mindful of the impact on demand.
Consumers can try to save money by shopping around for the best prices and cutting back on unnecessary expenses. They can also consider investing in assets that tend to do well in times of inflation, such as real estate and stock that has a strong history of performing well.
Conclusion
The IMF's prediction that inflation will remain elevated until 2025 is a significant concern for businesses and consumers. However, there are steps that businesses and consumers can take to mitigate the impact of inflation.
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The IMF attributes the high inflation to a number of factors, including the war in Ukraine, supply chain disruptions, and strong demand. The war in Ukraine has caused energy prices to soar, while supply chain disruptions have made it more difficult and expensive to produce and transport goods. Strong demand, particularly for goods, has also contributed to higher prices.
The IMF has urged central banks to raise interest rates aggressively in order to bring inflation down. However, it has warned that this could lead to a slowdown in economic growth.
What does this mean for businesses and consumers?
Businesses can expect to face higher costs due to inflation. This could lead to higher prices for consumers and lower profits for businesses. Consumers can expect to pay more for goods and services, and may have to cut back on spending.
What can businesses and consumers do?
Businesses can try to reduce costs by renegotiating contracts with suppliers and finding ways to improve efficiency. They can also pass on some of the higher costs to consumers, but they will need to be mindful of the impact on demand.
Consumers can try to save money by shopping around for the best prices and cutting back on unnecessary expenses. They can also consider investing in assets that tend to do well in times of inflation, such as real estate and stock that has a strong history of performing well.
Conclusion
The IMF's prediction that inflation will remain elevated until 2025 is a significant concern for businesses and consumers. However, there are steps that businesses and consumers can take to mitigate the impact of inflation.
Read next: AI Chatbot Outperforms Average Human in Creativity Test
