Inflation in many countries has reached its highest level in decades, as Russia’s invasion of Ukraine has led to higher energy and food prices, as well as a reduction in real incomes of the population.
The latest data for most of the world’s largest economies is worrisome as price pressures are at their highest levels in decades.
Central banks have responded by raising interest rates, even though higher borrowing costs could exacerbate the contraction in real incomes caused by higher prices.
High inflation remains geographically wide. Consumer price growth has even begun to rise in Asia, a region that until recently was largely an exception to the global picture.
This page provides a regularly updated visual description consumer price inflation in the world. This includes economists’ expectations for the future, which show that inflation forecasts are constantly being revised upward for 2023, according to top forecasters polled by Consensus Economics.
While higher inflation is now forecast to continue into next year, expectations of higher interest rates have led markets to become more optimistic that price pressures can be contained over the medium term. Tightening policy by the central bank in recent months has led investors to lower their expectations of what inflation will be in five years.
However, higher interest rates have also increased the likelihood of a recession in some countries, and economists fear come back to the stagflation of the 1970s, a situation characterized by constant price pressure and weak growth.
Rising energy prices led to rising inflation in many countries even before Russia invaded Ukraine. Daily data shows how pressure has increased amid the conflict, because of which Europe fears for its gas supplies in the coming quarters.
Higher inflation also extends not only to energy, but to many other subjectsespecially in countries where demand is high enough for businesses to shift to higher costs.
Rising prices limit household spending on goods and services. For the less well off, this can lead to people struggling to afford basic necessities like food and housing.
Daily data on essentials, such as wholesale prices for breakfast ingredients, is an up-to-date indicator of the pressures consumers are facing. In developing countries, the wholesale cost of these ingredients has a greater impact on final food prices; food also makes up a large share of household spending.
Another cause for concern is asset prices, especially houses.
They have risen sharply in many countries during the pandemic, helped by ultra-loose monetary policies, the push for more space by homeworkers, and government income support schemes. However, higher mortgage rates could soon dampen the pandemic-driven housing boom.
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