Morning Market Brief: April 10, 2024

Little change in global inflation in February?

The Organisation for Economic Co-operation and Development (OECD) says that global inflation was largely unchanged in February compared to January. While inflation is coming down, it remains stubbornly high, suggesting central banks’ battle against inflation is not quite over.?

• According to the OECD, the global inflation rate was 5.7% year-over-year in February. The OECD says 75% of countries saw inflation fall in February, while the remainder posted a higher inflation rate. Despite remaining elevated, inflation has dropped considerably compared to the 8.9% annual rate in February 2023.
• Energy prices continued to fall in February. However, the pace of the decline was slower in February than in January. The price growth in food moderated in February. While food prices remain high, the slowdown in price growth is welcome news for households, which have seen food take up a larger share of their budgets in recent years.
• Elevated core inflationary pressures persisted in February. The core inflation rate, which excludes more volatile items, was 6.4% in February, slowing from the 6.6% rate in January. High core pressures are contributing to central banks holding steady in this early part of 2024.
• The inflation rate among G7 countries was unchanged at 2.9% in February, keeping it at its lowest rate since April 2021. Canada posted an inflation rate of 2.8% in February, while the US rate ticked higher to 3.2%. The US releases its March inflation rate today.

Several central banks have noted that progress back to their 2% target might be choppy. February’s data reinforces that position. While inflation is coming down, the impact is being felt by households and businesses around the world. However, central banks are hoping that moderating inflationary pressures and a decline in borrowing costs will help springboard consumer confidence and demand. Thus, central banks appear poised to begin lowering interest rates in 2024.

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