G-20 News

The US inflation rate is in the middle of the pack globally

Data: Moody’s Analytics, OECD and Trading Economics; Graphic: Baidi Wang/Axios

Inflation in the United States is at its highest level in 40 years, but America is not alone. Soaring prices are a truly global phenomenon.

The big picture: An analysis of inflation in 111 countries from Deutsche Bank put the United States near the middle of the pack. Among these countries, the median inflation rate of 7.9% year-on-year more than doubled from 3.0% a year ago, largely on the back of soaring energy and commodity prices. food.

Inflation rate from May in Western European countries like the Netherlands (+8.8% YoY) and Germany (+7.9%) are roughly on par with the United States (+8.6% ).

As in the United States and much of the world, exacerbated energy prices exacerbated by the war in Ukraine have been a major driver of inflation in Europe. U.S. energy prices are up 35% from last year, according to the Bureau of Labor Statistics.

  • They increased further (+51%) in the United Kingdom, which, like the United States, recently recorded its highest inflation rate (+9.0%) since the beginning of the 1980s, according to the Financial Times. The United Kingdom bleak economic outlook heightens concerns about a cost of living crisis.

Break down : While inflation is generally high around the world, it is lower in major Asian economies such as China (+2.1%) and Japan (+2.5%) – although both countries have experienced increases this year.

  • After years of very low inflation, Japan should finally meet the central bank’s 2% target this year. But wages are stagnant and consumers are not used to rising prices, by BBC.
  • China’s lower inflation is partly explained by Beijing’s relatively limited stimulus during the pandemic, tight price controls and weak consumer demand, by WSJ.
  • South Korea, meanwhile, saw the biggest rise in inflation in 14 years in May, to 5.4%. President Yoon Suk-yeol warned on Friday of a coming economic ‘typhoon’ per foot.

While countries around the world, including South Korea, raise interest rates to stem inflation, Turkish President Recep Tayyip Erdoğan insisted on rate cuts.

  • Turkey’s official inflation rate of 74% is the highest in the G20, and it’s likely even higher in reality.
  • Next comes Argentina (+58%), which printed money to cover its deficit.
  • Several of the largest economies in Latin America and Africa are also recording double-digit inflation.

What to watch: Food prices are at an all-time high, according to the World Bank index, and have risen sharply since Russia invaded Ukraine in February. The twin rises in energy and food prices hit developing countries particularly hard.