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High inflation poses risks for emerging markets: Fitch

High inflation presents particular risks for emerging markets as they often face higher and more volatile inflation than developed markets, Fitch Ratings said Thursday.

The global rating agency said it expects price pressures around the world will ease starting from early 2022, “but inflation could remain elevated in many markets if services prices pick up.”

Higher inflation reflects the risk of economic overheating, in addition to growing macroeconomic imbalances in labor or asset markets, the agency said in a statement.

“It may also raise concerns about macro policy credibility, especially in emerging markets,” it added.

“High inflation can have more disruptive political effects for emerging markets than in developed markets, which can weigh on sovereign ratings. However, fiscal moves to shelter populations from the impact of inflation may also hurt public finances,” read the statement.

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