The raft of inflation data and central bank policy decisions were key drivers of prices this week, but to some extent China stole the show. We now think that a dismantling of the zero-COVID policy is well underway. On paper, the removal of restrictions should give a boost to commodity demand, and particularly transport-related demand for fuels. But in reality, we think the consequent surge in infections (and fear of infection) will weigh heavily on activity in the coming months. This is a key factor underpinning our forecast that commodity prices will fall in the first quarter of 2023.
Turning to next week, we think all eyes will remain on COVID-related developments in China. Otherwise, it will be fairly quiet on the data front, and it is the start of the Christmas holiday period in many countries. For the latest on our predictions for next year, see our “World in 2023” webpage.
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