Risks to DM Inflation Shifted To The Upside But Inflation Could Peak Soon

• Inflation remains sticky to the upside across developed markets (DMs); Fitch Solutions believes that the bulk of the increase in inflation is now behind us and that price pressures should start easing towards the end of Q421 as, for example, base effects and bottlenecks ease and the boosting effect of temporary factors on gas and electricity prices across Europe starts fading. 
• Weighted average DM inflation came in at 3.5% y-o-y in September according to estimates, down from 3.6% in August. 
• That being said, upside risks to the inflation outlook have risen significantly over the past weeks, and could rise further if high inflation, in conjunction with the labour market’s ongoing recovery, ultimately leads to higher wage demand and companies passing higher produce prices onto consumers.

(Source: Fitch Solutions)