Key Highlights
- Global inflation is projected to decline from 7.5 per cent in 2022 to 5.2 per cent in 2023
- Reduced forecast mainly due to lower food and energy prices and softening global demand.
- Annual inflation is expected to remain well above the long-term average, especially in Western Asia, South Asia, and Africa.
The United Nations has revealed that the global inflation rate is expected to decline from 7.5 per cent in 2022 to 5.2 per cent in 2023.
The UN stated that its forecast is based on reduced food and energy prices and softening global demand
This was disclosed this in its report titled “World Economic Situation and Prospects as of mid-2023.”
Inflation
The UN acknowledged that inflation has been easing in recent months, as it is expected to remain above central bank targets in 2023.
- “Global inflation is projected to decline from 7.5 per cent in 2022 to 5.2 per cent in 2023, mainly due to lower food and energy prices and softening global demand. Inflation will, however, remain well above the 2000-2019 average of 3.1 per cent.”
Food prices
They noted that global food prices have been falling since mid-2022 owing to several factors, including the resumption of exports from Ukrainian ports under the Black Sea Grain Initiative, saying:
- “The FAO Food Price Index declined by 20 per cent year-on-year in March 2023 to 126.9, the lowest value since July 2021.
- “ Although the unexpected OPEC+ production cut in April coupled with the European Union’s ban on Russian crude exerted temporary upward pressures on prices, oil prices continued to drop.
- “ Between January and early May 2023, Brent crude oil prices fell 16 per cent to about $75 per barrel, the lowest level since December 2021
Developing and Developed countries
In developed countries, headline inflation is expected to decline gradually from 7.8 per cent in 2022 to 4.8 per cent in 2023, but will remain well above central bank targets, typically around 2 per cent.
They added that in the United States, headline inflation has been easing over the past year, falling to 5.0 per cent in March 2023, the lowest rate since May 2021.
- “In the European Union, inflation declined to 8.3 per cent in March, ranging from about 3 per cent in Luxembourg and Spain to 25.6 per cent in Hungary.
- “While headline inflation rates have been falling, core inflation in the United States and Europe remain high, mainly driven by rising service prices (e.g., housing, insurance, transport) and robust wage growth.
- “Inflation is also trending downward in most developing countries amid lower commodity prices and reduced global supply constraints and depreciation pressures. Annual inflation will, however, remain well above the long-term average, especially in Western Asia, South Asia, and Africa.
The UN warned that despite global food prices declining since mid-2022, domestic food inflation has often stayed elevated due to a number of factors, including still-high import costs, local supply disruptions, and market imperfections.
- “According to the World Bank, food inflation in early 2023 remained above 5 per cent in about 90 per cent of developing countries.
- Continuing high inflation in developing countries that are home to large numbers of people in poverty represents an additional barrier to poverty eradication.
- “Emerging evidence from countries affected by the current episode of high food prices reconfirms earlier evidence that women and children are the worst affected by the resulting hunger and malnutrition.
What you should know
Nigeria’s inflation rate rose to 22.2% in April 2023, the highest since January 2004, 19 years ago. In fact, Nigeria has posted a record inflation rate every month since July 2022. It is as if we hit new record highs every month that inflation numbers are published.
The highest increases were recorded in prices of gas, air transport, liquid fuel, vehicle spare parts, fuels, and lubricants for personal transport equipment, medical services, and road transport.
The contributions of items on the divisional level to the increase in the headline index are; food and non-alcoholic beverages (11.51%), housing water, electricity, gas, and other fuel (3.72%), clothing and footwear (1.7%), and transport (1.45%).
