Recent Inflation Causes Easing and Future Prospects

The 2020-2021 La Niña climate and global inflation have led to steep inflation, but since 2022, prices of crude oil and other raw materials have fallen for a long time since the release of the U.S. strategic reserve, contributing to stability in inflation.

As a result, the dollar continued to strengthen, and the stock price of the economy-sensitive sector related to raw materials became relatively weak compared to technology stocks.

There are two main factors that play a role in easing inflation.

First, China's real estate/construction recession, which has the largest demand for raw materials. Accordingly, it is contributing greatly to easing inflation due to a decrease in demand for raw materials related to the economy, including energy, and falling prices.

Second, high temperatures have been maintained since late 2022 after global temperatures, which have a very large impact on energy demand and grain production, rose to unprecedented levels. In particular, land and sea temperatures in the high-altitude area of the Northern Hemisphere from 20 to 90 degrees Celsius have been maintained very high, reducing energy demand and increasing grain production in the region, which has the highest population and economic density.

In winter, however, temperatures are rapidly dropping across the globe except for the northern hemisphere's high altitude (20-90 degrees north latitude). Land temperatures in Antarctica have fallen to historic lows, and the southern hemisphere, including the equatorial region (20 degrees south - 20 degrees north latitude), is rapidly falling, indicating a shift to a phase of global temperature decline in the future.

As China actively focuses on stimulating the real estate economy, demand for raw materials and prices are expected to rise along with China's recovery in the real estate/construction economy, and global temperatures will fall for a long time in the future, attracting increased energy demand and reduced grain production.

Thus, from 2025, the strong inflationary phase seen after the end of 2020 could begin again.

The following data shows changes in land and sea temperatures in the North High (20 degrees -90 degrees north latitude) and the South High (20 degrees -90 degrees south latitude). Based on the 30-year average temperature from 1991 to 2020, the average difference compared to this standard is drawn.

The temperature in the high-altitude land of the southern hemisphere has risen by about 2 degrees Celsius and is now almost zero, but the temperature in the high-altitude land of the northern hemisphere is still maintained after rising from 0 to 1.5 degrees Celsius since 2022. This has had a significant impact on the price of crude oil, metal, and grain, which have not risen and are the forces that keep current prices stable.

However, as global temperatures are falling, this decline is expected to spread to the northern hemisphere in 2025 and lower temperatures overall, which will lead to higher energy and grain prices, which will act as a strong inflation factor.