Published by Jessica Weisman-Pitts
Posted on February 6, 2023
4 min readLast updated: February 2, 2026
Add as preferred source on Google
There is widespread agreement that 2022 has been a tough year, so it is understandable when many people breathe a sigh of release as the New Year sets in. However, a few things will remain in focus even in the New Year, inflation included.
There is widespread agreement that 2022 has been a tough year, so it is understandable when many people breathe a sigh of release as the New Year sets in. However, a few things will remain in focus even in the New Year, inflation included.
What are experts saying about inflation in 2023? Every investor would wish to know more about the interesting relationship between inflation and stocks. As you browse admirals.com you will learn more about what causes inflation. Also, this article explores inflation predictions and gives tips for a successful year.
What the IMF Says
While global inflation is predicted to slow down in 2023, experts believe that it will still be painful. According to the International Monetary Fund (IMF), global inflation will reduce to about 6.5%, compared to the 8.8% posted last year. However, much of this improvement will not be experienced in the lowly performing economies. According to the global organization, developing economies are likely to only enjoy reduced inflation to the 8.1% mark.
The main reason the recession is not easing any time soon is that the cogwheels of the global economy – the US, China, and Europe – are suffering from slowed economic activity. According to the IMF managing director Kristalina Georgieva, the situation is further exacerbated by the surge of covid-19 cases in China.
Most of the resilience against inflation is seen in the US, especially due to the strength of the labor market. However, this strength may prompt the Fed to maintain tight interest rates. This could bring mixed results to the inflation scenario.
Other Expert 2023 Predictions towards Inflation
To add to the sentiments from the IMF director, experts across the globe are seeing a more or less situation – ease in inflation but still difficult for most people. An expert from the US’s Morningstar Research Services believes that inflation will reduce mainly because of the effects on particular goods categories – energy, vehicles, etc.
For the last couple of years, these items have been driving inflation. Preston Caldwell from this organization believes that pressure on these goods will reduce, for instance, as supply chains emanating from the Ukraine war relax. Further, the cooling off of Fed measures will serve to reduce inflation.
Perhaps the only disparity among economic experts is in how far inflation can drop. This is evident from the differences in the projected core price consumption expenditures index, better known as core PCE. This popular measure of inflation shows the prices for goods and services by people in the United States. It is one of the preferred measures of inflation by the Fed. While the Federal Reserve predicts the core PCE to drop from 5.1% to 3.1% in 2023, experts at the Conference Board see it dropping to about 2.8%.
What to Do As an Investor
The majority of the predictions show that most countries will somehow manage inflation in 2023. Central banks will most likely tend to manage the inflation levels, obviously through interest rates.
Therefore, the outright first recommendation to the investor is to choose which sector to invest in. Some defensive and attractive sectors that immediately come to mind are value stocks, healthcare, and staples. These are excellent when it comes to dividends.
With the likelihood of the cost of living easing as the days go by, investors may have opportunities from growth stocks. Despite the common market volatility, stock investors should seek to generate income with strategic investments.
Most important, investors need to have long-term strategies that go beyond the current negative market situation. This way, no portfolios will be overlooked in case of a market turn point.
Remember that there are currencies that are safer than others. The dollar is the global reserve currency, so it is bound to be stronger in the coming days. Some also consider the Swiss franc as worth consideration.
Conclusion
With the road appearing bumpy with market volatility and interest rate interventions, it might take time before normality can be restored. Economies are determined to take control of inflation, but the investor better brace for more “pain”.
The ball is in the world’s court because if financial, health and geopolitical challenges can be avoided, 2023 inflation can be contained. It’s now mostly a wait-and-see game.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
The International Monetary Fund (IMF) is an international organization that aims to promote global economic stability and growth by providing financial assistance and advice to member countries.
Value stocks are shares of companies that appear to be undervalued in price compared to their intrinsic value, often characterized by lower price-to-earnings ratios.
Core PCE (Personal Consumption Expenditures) is a measure of inflation that excludes food and energy prices, providing a clearer view of underlying inflation trends.
Interest rates are the cost of borrowing money, expressed as a percentage of the amount borrowed, which can influence economic activity and inflation.
Explore more articles in the Finance category
