Due to high exchange rates... overseas IB price forecasts are rising all at once

The world's major investment banks (IB) have all raised their consumer price growth forecasts for next year. The solution is to reflect the judgment that the aftermath of the high exchange rate will accumulate and raise prices over time differences.

According to the International Finance Center on the 4th, the consumer price growth rate forecast for next year proposed by 8 major IB companies averaged 1.9% at the end of last month, up 0.1 percentage points from 1.8% at the end of October in just one month.

Barclays and Goldman Sachs raised their forecasts from 1.8% to 1.9%, and Citi raised their forecasts from 1.7% to 1.8%. Nomura revised it from 1.9% to 2.1%, and JP Morgan revised it from 1.3% to 1.4%, respectively. Meanwhile, Bank of America (1.8%), HSBC (2.0%), and UBS (1.9%) maintained their previous forecasts.

The annual price forecast for this year has also risen all at once. IBs increased the consumer price growth rate by 0.1 percentage points this year from an average of 2.0% at the end of October to 2.1% at the end of November. Five organizations, including Barclays, Citi, JPMorgan, Nomura, and UBS, adjusted from 2.0% to 2.1%, and Goldman Sachs also increased from 1.9% to 2.0%. Bank of America remained at 1.9% and HSBC at 2.2%.

The reason behind this forecast adjustment is an increase in exchange rates. As exchange rates rise, prices of petroleum and imported agricultural and livestock products jump, and prices for processed foods and restaurants will also be affected over time. This also seems to reflect the increased pressure on the demand side due to the recovery in domestic demand.

The Bank of Korea also raised its inflation forecast for this year and next year to 2.0% → 2.1% and 1.9% → 2.1%, respectively, according to the economic forecast on the 27th of last month. Governor Lee Chang-yong Han stated, “I am concerned about the possibility that prices will rise further due to the exchange rate.” Vice Governor Kim Woong Han also said at an internal meeting on the 2nd that “we need to watch the impact that higher exchange rates will have on future prices.”

Meanwhile, the National Data Center announced on the 2nd that the consumer price index for November rose 2.4% from the same month last year. The inflation rate continued to rise for 3 consecutive months from 1.7% in August to 2.1% in September and 2.4% in October.