We have been very active in our discussions of the impact of the pending rise in food prices around the world (from central bank largesse to weather-related chaos). As Goldman notes, food
inflation has been one of the most significant sources of headline
inflation variation in emerging markets (EM) over the past few years.
Since June, international prices for agricultural commodities have
risen almost 30%, increasing the risk of fresh, food-related increases
to EM headline inflation. We, like Goldman, expect EM headline inflation
to start to reflect the relevant pressures more broadly in the October
prints at the latest. While the effects, for now, are expected to be
less extreme than the 2010-2011 episode, the timing as the US enters its
fiscal-cliff-prone malaise, could mean a further round of easing will reignite this critical inflationary concern.Continue Reading at ZeroHedge.com…
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