The average CPI inflation rate across the fifteen leading emerging economies stabilised at 4.3% year-on-year in August. The inflationary impact remains weaker than in 2022, due in particular to reduced spillover effects on agricultural and food prices. Manufacturers’ views on the trend in input and finished product prices have returned to their pre-conflict levels.
However, against a backdrop of increasingly frequent and destructive extreme weather events, pressure on agricultural and food prices is likely to continue.
The manufacturing PMI improved very slightly in August but remains below its February 2026 level. The recovery remains sluggish but is less volatile than in 2022.
According to estimates by the Institute for International Finance (IIF), non-resident portfolio investment flows into emerging markets have been particularly volatile since the start of the armed conflict, reflecting investor nervousness. Looking at cumulative figures since February provides a clearer picture of the trends. In the equity markets, the significant outflows seen up to July (particularly in South Korea and Taiwan) came to a halt in August. Inflows into local bond markets remained positive, although they slowed in August (averaging around USD 30 billion per month since April) domestic interest rates and risk premiums have performed very well.
