Global inflation drop stalled by persistent service sector price increases: Fitch

May 23, 2024 (MLN): Headline inflation rates are falling across the world but their descent is being hampered by stubborn service sector price growth, according to Fitch ratings.

Goods inflation has slowed rapidly, helped by a reversal of the food and energy surge of the past two years.

Core goods inflation, which excludes these two items, has also declined but the extent of the drop has differed across countries.

In some countries, core goods inflation could slow further as it remains above pre-pandemic averages. Elsewhere, there is limited room for further decline.

US core goods inflation is already back to its pre-Covid-19 trend and there is little sign at a disaggregated level of goods prices outright declining.

Price stabilization rather than deflation seems more likely. That means that returning headline inflation to target will now have to come from slowing services inflation.

Fitch Ratings’ statistical analysis shows services inflation to be more persistent than goods and several factors suggest that it will remain sticky.

Copyright Mettis Link News