Inflation has begun to show signs of abate from multi-decade highs reached in many countries after Russia’s full-scale invasion of Ukraine.
The latest figures from most of the world’s largest economies remain worrisome reading, with price pressures remain high while the war in Ukraine continues to keep energy and food prices high. But in some countries the pressures have eased and wholesale energy and food prices have fallen. Economist and investors also expect inflationary levels to stabilize in the coming years.
high inflation it remains geographically wide, even if it is smaller in many parts of Asia.
Central banks have reacted with a series of interest rate hikes, although higher borrowing costs could exacerbate the contraction in real income.
This page provides a regularly updated visual narrative of consumer price inflation worldwide.
It includes economists’ expectations for the future, which still show inflation projections for 2023 being revised upwards for many countries, even though they have leveled off elsewhere, including Germany, according to leading forecasters surveyed by Consensus Economics. .
Investor expectations about where inflation will be five years from now have stopped rising, reflecting more aggressive central bank tightening and a weakening economic outlook.
In some countries, particularly in Europe, government fiscal packages to offset the higher cost of energy are having an impact.
Rising energy prices were the main driver of inflation in many countries, even before Russia invaded Ukraine. Daily data shows how pressure has intensified in the wake of a conflict that has forced Europe to seek alternative gas supplies.
However, wholesale prices have now fallen as a result of weakening global demand and European gas storage facilities filling close to capacity.
The pass-through from wholesale prices to consumer prices is not immediate and domestic and business costs remain high in Europe, where the energy crisis has been most intense due to the region’s greater reliance on gas from Russia.
Higher inflation has also spread beyond energy to many other elementswith rising food prices hitting the poorest consumers in particular.
Rising prices limit what households can spend on goods and services. For the less advantaged, this could lead to people struggling to pay for basics like food and housing.
Daily data on staples, such as the wholesale price of breakfast ingredients, provide an up-to-date indicator of the pressures facing consumers. Although they have decreased in recent months, they remain at high levels.
In developing countries, the wholesale cost of these ingredients has a greater impact on final food prices; food also represents a larger share of household spending.
Another point of concern is asset prices, especially housing.
These spiked in many countries during the pandemic, buoyed by ultra-loose monetary policy, the desire of home-based workers for more space and government income support schemes. However, higher mortgage rates are already causing a significant slowdown in house price growth in many countries.