Authors: Madhu Manivannan, Caitlin Man, Galen Lau & Sydney Hartstonge

While global inflation generally has stabilised in much of the world, high inflation and volatile currencies have continued to disrupt some economies. Explaining changes in cost of living indices to your assignees and other stakeholders can be a real challenge, especially when there is geopolitical and economic turbulence at play. In this blog post we will give background on volatility in eight countries over the last three months.

Given the impact it can have on assignees it is vital to have up to date information for high inflation locations. With ECA’s quarterly updates for high inflation locations, companies can be proactive with regards to their assignees concerns, giving them peace of mind.

To help you understand what has changed and how it impacts assignees we’ve provided explanations of the impact of price changes and exchange rate movements over the last three months below.

 Argentina

What has impacted the cost of living?

In the year and a half since Javier Milei took office, inflation in Argentina has been radically cut, but the cost of living remains high. The rate of inflation has slowed, with prices increasing by 4% in the three months leading up to June. In the same period the Argentine peso has fallen sharply in value, depreciating by 17% against the euro and 10% against the US dollar.

What does this mean for expats?

Assignees will see a noticeable fall to their indices as the impact of the peso’s depreciation outweighs that of the price rises.

 Burundi

What has impacted the cost of living?

Despite ongoing political tensions with neighbouring Rwanda and the Democratic Republic of the Congo, as well as a tense parliamentary election in June, inflation has slowed somewhat in Burundi. Prices have risen by 5% in the three months since March. The Burundian franc has seen a 1% depreciation against the US dollar and a 9% depreciation against the euro in the same period.

What does this mean for expats?

With inflation outpacing the changes in the US dollar, assignees from the US will see a moderate rise in their indices, while depreciation against the euro may offset the impact of inflation for European assignees.

 Iran

What has impacted the cost of living?

Although inflation remains high in Iran, the twelve day long Israel-Iran war in June does not appear to have exacerbated the situation significantly. Between March and June, prices in Tehran rose by 7%. The Iranian rial has appreciated 3% against the US dollar and depreciated 6% against the euro in the same period.

What does this mean for expats?

Assignees are likely to see small rises to their indices as inflation marginally outweighs currency movements.

 Malawi

What has impacted the cost of living?

Malawi continues to experience high inflation due to the combined impact of shortages of foreign currency, public debt, and drought. Prices increased by 7% in Lilongwe in the three months since March. The Malawian kwacha weakened by 8% against the euro but remained stable against the US dollar.

What does this mean for expats?

As inflation and currency movements largely offset each other, most assignees should see minimal changes to their indices.

 Nigeria

What has impacted the cost of living?

Nigeria continues to experience a cost of living crisis, a consequence of a depreciating naira and the disastrous knock on effects of the removal of a long-standing fuel subsidy. Inflation appears to have stabilised somewhat in the three months since March, with prices rising by 5%. However, the naira remains weak, having depreciated 3% against the dollar and 11% against the euro in the same period.

What does this mean for expats?

As inflation partially outweighs the currency movements, assignees will see smaller rises in their indices.

 South Sudan

What has impacted the cost of living?

South Sudan’s already fragile economy is further threatened by internal political conflict, as well as the danger of the two year conflict in neighbouring Sudan spilling over the border. However, in the last three months the level of inflation in South Sudan has reduced sizably, with price increases now being recorded at 7% between March and June. This has coincided with a weakening local currency, as the value of the South Sudanese pound has fallen by 10% against the euro and 2% against the US dollar.

What does this mean for expats?

Assignees from the US will likely see a rise in their indices as the inflation outweighs the minor depreciation of the local currency against the US dollar. Assignees from the EU will see minor changes to their indices as the inflation and depreciation of the local currency against the euro largely offset one another.

 Turkey

What has impacted the cost of living?

Thanks to tighter monetary policy, inflation remains high but stable in Turkey, with prices increasing by 6% in the three months from our March survey. The brief stabilisation of the lira earlier this year has faded, with the lira depreciating 15% against the euro and 7% against the US dollar.

What does this mean for expats?

Assignees are likely to see their indices fall with the depreciating currency outweighing inflation.

 Venezuela

What has impacted the cost of living?

The effects of Venezuela’s rapidly weakening bolivar continue to be felt, driving an overall price increase of 62% since March. The bolivar has depreciated by 36% against the US dollar and 42% against the euro.

What does this mean for expats?

The high inflation significantly outweighs the currency movements and so assignees will see their indices rise.