Page 7 - Policy Economic Report - June 2024

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Global Inflation

Global inflation has continued to decline, yet it remains above target in most advanced economies and in
about one-fourth of inflation-targeting EMDEs. Inflation continues to wane globally, making progress
toward central bank targets in advanced economies and EMDEs, but at a slower pace than previously
expected.

According to World Bank, global inflation is expected to decline to 3.5 percent in 2024, before easing
further, to 2.9 percent in 2025 and 2.8 percent in 2026. The slowdown is expected to be driven by
softening core inflation, as services demand moderates and wage growth slows, in addition to a modest
decline in commodity prices.

In advanced economies, disinflation in consumer goods prices appears to have bottomed out, while
inflation in consumer services remains elevated. In the United States, resilient economic activity,
alongside rapid increases in the cost of shelter, has given rise to persistently high services and, more
broadly, core inflation over the past few months.

Figure 2: Global consumer price inflation

Percent
12

World Advanced economies EMDEs

10

8

6

4

2

0

Source- World Bank

As against commodity prices, World Bank highlights that aggregate commodity prices have generally
increased in 2024 after declining, on average, last year. The commodity prices are projected to decline
slightly but remain well above 2015-19 levels. Oil prices have remained volatile this year amid a confluence
of heightened geopolitical tensions and OPEC+ production cuts. According to World Bank, robust growth
of clean energy investment is expected to continue supporting base metals prices. Food prices are
projected to soften in the next two years, aided by growing supplies of grains and edible crops.

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