Inflation doesn’t let up

The beginning of this year has been more challenging than anticipated. On the international front, inflationary pressures have intensified, with further increases in the prices of commodities, especially oil and agricultural goods. The rising oil price has been mainly driven by strong demand, in a context of restricted supply as a result of global decarbonization efforts. With regard to agricultural commodities, grain harvest projections have been revised downward, especially in Brazil and Argentina, due to weather problems that have affected production. Inventories of these products are low, accentuating pressure on prices.

Geopolitical tensions are exacerbating this trend. For example, Russia and Ukraine are two of the world’s biggest wheat exporters. In addition, China has avoided a more intense deceleration of the economy through stimulus policies and this has put more pressure on the prices of commodities, especially metals. In turn, the Omicron wave intensified inflationary pressures in industrial inputs by limiting production chains and helped sustain global demand at high levels in relation to supply.

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