馃洅 COMMODITIES: PROBABILITIES OF APPRECIATION 馃洅
The headline inflation has declined worldwide. Much of the success has been Central Bank policies and the high comparative base of 2021 and 2022. However, the problem is that such a base has ended. From now on and next months, the measure could be more realistic due to the fact that there is no longer a period of high inflation.
Headline inflation is the rate at which the prices of goods and services in an economy are rising. It is typically measured as a percentage change in the Consumer Price Index (CPI), which is a basket of goods and services that are commonly purchased by households. There are a number of factors that can cause inflation, including:
- Increased demand for goods and services
- Decreased supply of goods and services
- Increased government spending
- Increased money supply
In summary, there are a number of policies that can be used to control inflation, including:
- Increasing interest rates
- Reducing government spending
- Selling government bonds
- Increasing taxes
At the moment, commodity prices can influence headline inflation, and indirectly, core inflation; that could be another serious problem (see why: https://jjplindex.blogspot.com/2023/07/end-of-high-inflation-smells-like-70s.html ). The chart shows the probabilities of appreciation of each versus their volatility, based on a 1-year sample of weekly data. This indicates that more than 50% of the chosen indicators have a probability of appreciation greater than 50%.
The world's central banks must decide whether or not to increase future rates. They are decided to do it. If NATO decides to continue with the Ukraine tensions, they seek to curb future inflation in the event of another imbalance in the supply chain (where energy and cereals will suffer).
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J. Joel Padilla
Copyright: Joel Padilla 2023
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