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Inflation round-up: rising cost of living evident around the world

ECA International

Not for the first time, Venezuela produced the most dramatic inflation headline this month, but there is now little doubt the cost of living is rising on a global level. Whether the new trend will last is less certain.

Monthly inflation data had not been published in Venezuela since the end of 2015, when annual inflation stood at 180.9%. However, the national statistics office recently reported an annual rate for 2016 of 800%. It is hard to know how accurate this is, because the economy and society are in disarray and data collection must be very difficult at present. It also depends on which of Venezuela's multiple exchange rates you use. Meanwhile, the International Monetary Fund forecasts that the equivalent figure for 2017 will be 1660%! 

High-inflation countries (CPI 10%+)
Country CPI % Last reported Trend IMF 2017 forecast
Angola 41.9 Dec-16 ▲ Rising 38.3
Argentina 40.5 Apr-16 ► Stable 23.2
Azerbaijan 17.1 Nov-16 ▲ Rising 8.5
Belarus 10.7 Dec-16 ▼ Falling 12.0
DR Congo 15.3 Nov-16 ▲ Rising 2.7
Egypt 23.3 Dec-16 ▲ Rising 18.2
Ghana 15.5 Nov-16 ▼ Falling 10.0
Haiti 14.2 Nov-16 ▲ Rising 9.1
Libya 25.3 Jun-16 ▲ Rising 12.5
Malawi 16.1 Nov-16 ► Stable 13.9
Mozambique 25.3 Dec-16 ▲ Rising 15.5
Myanmar 11.4 May-16 ▲ Rising 9.1
Nigeria 20.1 Dec-16 ▲ Rising 17.1
Sierra Leone 15.3 Nov-16 ▲ Rising 9.0
South Sudan 479.7 Dec-16 ▼ Falling 110.7
Sudan 29.5 Nov-16 ▲ Rising 16.1
Surinam 58.0 Sep-16 ▲ Rising 30.7
Syria 44.5 May-16 ▲ Rising n/a
Ukraine 12.4 Dec-16 ► Stable 11.0
Venezuela 800.0 Dec-16 ▲ Rising 1660.1

Higher oil prices are the main culprit driving inflation up globally and they were boosted in December when the oil-producing countries of OPEC forged a deal to cut production. However, full implementation of the agreement could be hard to ensure. Any slippage and prices could come down again.

Nevertheless, as the next table shows, other commodity prices are also increasing, and with food prices on the up too, it is no surprise that the number of countries reporting low or negative inflation is falling fast. A big part of the reason is that the cost of living is now persistently rising in China, which is exporting inflation to the rest of the world by way of its many other traded items. At the same time, it must be said, China is also flooding the world with cheap airfares and its domestic demand continues to be held back by a considerable debt burden and a generally lacklustre economy, at least compared with previous years, so its consumer price index could fall back again. 

On the other hand, with United States' President Trump's policies also likely to stoke inflation, and indices rising sharply in the United Kingdom because of the fall in the pound following the Brexit vote, it seems fair to assume the uptrend in worldwide cost of living has at least some way to run.

Global inflation indicators
Indicator Latest Recorded One year ago Y-o-y change
Average global CPI inflation* 4.32% 20/01/17 3.45% ~
Oil price (Brent Crude) USD 55/brl 25/01/17 USD 29 +90%
All-commodities index (IMF)
(2005 = 100)
114.7 01/01/17 90.8 +26%
Food price index (UN-FAO)
(2002-04 = 100)
171.8 01/01/17 153.4 +12%
*Based on 184 ECA Cost of Living countries; no account taken of relative weightings. South Sudan and Venezuela have been excluded due to very high inflation levels.

Inflation is on the increase in Germany too, where many are calling for the European Central Bank to lift interest rates. If the ECB responds, tighter monetary policy would be likely to boost the value of the euro, but it could also stifle what is as yet a fragile economic recovery in much of the single-currency zone, several of whose member states would find higher interest rates wholly unsuitable for current conditions. A hard call for the ECB, therefore.

One country risking seriously higher inflation, according to an Australian economist, is Papua New Guinea, which is accused of effectively printing money. Inflation there is 6.8% already and will probably move higher if the allegations are correct.

Finally, here is our regular inflation watch list:

On watch! (notable rise in inflation, but below 10%)
Country Latest CPI Data month Up from
Burundi 7.1% Nov-16 6.0% Oct-16
Guam 6.2% Sep-16 4.6% Mar-16
Rwanda 7.3% Dec-16 5.8% Sep-16
Turkey 8.5% Dec-16 7.0% Nov-16
Uganda 5.7% Dec-16 4.0% Oct-16
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