It will be a year when the uncertainty levels will be high from the first day itself. There are two conflicts ongoing in global strategic regions. The interest rates are at decades high with some level of issues relating to the road ahead. On the side of these issues, inflation and growth have a possibility of divergence creating a stagflation period.
All these factors impact everyone’s decision-making process directly or indirectly. But certain things cannot be changed despite all these problems that is consumption of energy and food. Though conflicts and El Niño have already impacted the supply side, the demand remains strong.
The problem with these product categories is that each country rightfully tries to protect local prices first and then global supply. This has led to 19 countries banning 27 products and 7 countries putting export restrictions on 8 products till October 2023.
The result of this has already led to some reversal of food and energy inflation. But the real impact might come through in the first quarter of 2024. But if this comes true then the bigger problem will be whether this round of price increases hamper the consumption more than estimates. If it does the impact on the economy will be higher too.