Double-digit inflation in 2022 in almost half the world!

The graphic shows countries with their inflation rates, using data from Trading Economics.*

Geopolitical tensions are triggering high energy costs, supply-side disruptions are distorting consumer prices and new macroeconomic forces shaping the global economy. The result is that almost half of the world's countries are seeing double-digit inflation rates or higher. Some are even facing triple-digit inflation rates. Globally, Zimbabwe, Lebanon, and Venezuela have the highest rates in the world.

As price pressures mount, 33 central banks tracked by the Bank of International Settlements (out of a total of 38) have raised interest rates this year. These coordinated rate hikes are the largest in two decades, representing an end to an era of rock-bottom interest rates. Going into 2023, central banks could continue this shift towards hawkish policies as inflation remains aggressively high.

Since October 2020, the index of global energy prices − made up of crude oil, natural gas, coal, and propane − has increased drastically. Driven by the war in Ukraine, energy inflation is pushing up the cost of living around the world. Compared to the 2021 average, natural gas prices in Europe are up six-fold. Real European household electricity prices are up 78% and gas prices have climbed even more, at 144% compared to 20-year averages.

Amid global competition for liquefied natural gas supplies, price pressures are likely to stay high, even though they have fallen recently. Other harmful consequences of the energy shock include price volatility, economic strain, and energy shortages.

Moreover, inflation has been very volatile this decade.

If history is an example, taming rising prices could take at least a few years yet. Take the sky-high inflation of the 1980s. Italy, which managed to combat inflation faster than most countries, brought down inflation from 22% in 1980 to 4% in 1986.

If global inflation rates, which hover around 9.8% in 2022, were to follow this course, it would take at least until 2025 for levels to reach the 2% target.

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*Source: www.visualcapitalist.com/mapped-which-countries-have-the-highest-inflation/