Inflation
Inflation is an upsurge in the level of prices of goods and services in an economy, which leads to a decline in the purchasing power of the currency’s value. It is calculated as the rate of change in prices in a specific period of time. The consumer price index (CPI) is one of the most common indicators for measuring inflation in an economy.
Global Inflation
Global inflation is the measure of the average annual rate of growth increase in national prices across all countries. It can be calculated using various methods including simple average, weighted average, and median price change. GlobalData forecasts that the world economy will grow at a slower pace of 3.5% in 2022 following a 5.9% growth in 2021. On the other hand, the global inflation rate is projected to rise to 6.5% in 2022 from 3.5% in the previous year due to supply chain disruption amid the Ukraine-Russia war.
Rising Inflation and Interest Rates
As a result of rising inflation rates in both developing and advanced economies, central banks have been forced to tighten monetary policy and raise interest rates to keep prices from rising. However, a steady increase in interest rates could cause financial distress in some economies.
Top Countries with High Inflation Rates:
Venezuela
Venezuela has been in a hyperinflation cycle for many years. According to GlobalData, inflation was recorded at 19,906% in 2019 before reducing to 2,355.1% in 2020 amid COVID-19. A high level of inflation impacts investors’ confidence in the country. In 2021, Venezuela's inflation rate was 686%, demonstrating a deceleration of consumer price growth versus the previous year. GlobalData forecasts inflation to decline to 514% in 2022.
Sudan
Consumer price inflation in Sudan reached 331% in 2021, the highest rate in the last decade. Between 2010-2021, the consumer price inflation in Sudan increased by more than 2000%. On a year-on-year basis, it increased by 120% in 2021.
Lebanon
Lebanon’s inflation has skyrocketed since 2020. According to the Central Administration of Statistics, the country’s inflation rate increased from 85% in 2020 to 150% in 2021, suggesting a financial meltdown in the Middle Eastern nation. GlobalData forecasts that the inflation rate will come down to 116% in 2022.
Zimbabwe
In 2020, inflation skyrocketed to 621%, which more than doubled in 2019, at 237%. The surge in inflationary pressure was due to the rise in global commodity prices, a planned increase in power tariffs and a weakening of the local currency against the US dollar on the black market. According to the new budget plans for 2021 and onwards, the fiscal policy would be prudent, and the government would not resort to financing the deficit by printing money. Consequently, annual inflation is expected to cool down from 143% in 2021 to 88% next year and 23% by 2025, according to GlobalData forecasts.
Yemen
Inflation averaged 23.15% during 2016–2020 and in 2021 reached 64%, according to GlobalData. The average annual inflation rate over 2022–2025 is projected to be 18.49%, according to GlobalData.
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