Sign in

Inflation round-up

When the cost of living soared across the world in 2022, following Russia's invasion of Ukraine, our table of countries with inflation over 10% quickly grew, reaching a peak of 76 in November that year. Many of those countries were previously strangers to the list, including numerous developed economies with sound financial systems. As inflation has receded since, richer countries have steadily been able to get prices under control.

Many poorer nations have not been so lucky, suggesting that their economies have deep structural problems keeping price rises high. Our table has shrunk to only 25 countries now (see below), not one of which is considered an advanced economy. Furthermore, all but two of those that remain have inflation levels far above the 10% threshold, while less than a third have falling trends, so the table seems unlikely to shrink much more in the near future.

For global mobility teams trying to protect standards of living for expatriate staff in these locations, such persistently-high inflation can be challenging. Most of the countries involved have weak currencies, so the foreign currencies assignee salaries are usually based on can purchase more of the local currency over time, thereby offsetting to at least some degree the higher cost of living brought about by excessive inflation. However, some of the high-inflation country currencies, such as the Angolan kwanza, Burundian franc, Cuban peso, Egyptian pound, Haitian gourde, Myanmar kyat and Surinamese dollar have been stronger of late, whether because of better economic conditions or, more usually, central bank controls over their value. In these cases, the currency factor cannot offset the inflationary one, leaving the possibility of more-expensive cost of living adjustments ahead.

If you could benefit from ECA's long experience and expert guidance on cost of living or any aspect of expatriation for work, please do get in touch.

High-inflation countries (annual CPI 10%+)

Country CPI % Data month Trend IMF 2024 forecast %
Angola 20.0 Dec-23 ▲ Rising 22.3
Argentina 211.4 Dec-23 ▲ Rising 93.7
Burundi 20.4 Nov-23 ▼ Falling 16.1
Congo DR 42.5 Oct-23 ▲ Rising 10.6
Cuba 31.8 Nov-23 ▼ Falling n/a
Egypt 33.7 Dec-23 ▼ Falling 32.2
Ethiopia 28.3 Nov-23 ► Steady 20.7
Gambia 18.4 Nov-23 ► Steady 12.3
Ghana 23.2 Dec-23 ▼ Falling 23.2
Haiti 22.2 Nov-23 ▼ Falling 13.4
Iran 39.2 Nov-23 ► Steady 32.5
Laos 24.4 Dec-23 ► Steady 9.0
Lebanon 211.9 Nov-23 ► Steady n/a
Liberia 11.7 Aug-23 ► Steady 8.0
Malawi 33.1 Nov-23 ▲ Rising 19.8
Myanmar 28.6 Jun-23 ▲ Rising 7.8
Nigeria 28.9 Dec-23 ▲ Rising 23.0
Pakistan 29.7 Dec-23 ▲ Rising 23.6
Sierra Leone 54.2 Nov-23 ► Steady 29.8
Sudan 63.3 Feb-23 ▼ Falling 152.4
Surinam 38.7 Nov-23 ▼ Falling 30.9
Turkey 64.8 Dec-23 ▲ Rising 62.5
Venezuela 189.8 Dec-23 ▼ Falling 200.0
Zambia 13.1 Dec-23 ▲ Rising 9.6
Zimbabwe 26.5 Dec-23 ▲ Rising 222.4

It is possible, of course, that the list of high-inflation countries could soon grow rather than shrink. Many commentators are concerned that the conflict in the Middle East and, especially, the Houthi's persistent attacks from Yemen on shipping in the Red Sea, could cause a similarly global inflationary impact like the one seen in 2022. Insurance and freight costs are rising because of the threat, while ship journeys are being greatly lengthened as the Suez Canal is avoided and carriers are re-routed around Africa. Delays are having a knock-on effect on global supply chains and again raising costs. The good news is that the world is in the middle of a positive shipping-capacity cycle, with lots of new ships likely to soon lower freight prices. Furthermore, the extra shipping costs currently only average about 2% of overall costs - they would add to inflation if applied to consumer prices but suppliers might decide to swallow what are likely to be temporary extra costs, given that the Russia-provoked cost of living crisis was so recent. As virtually every country in the world was badly affected by higher inflation in 2022, none surely will want to see a repeat. Concerted action to stop the Houthi attacks quickly should be widely supported (however quietly!) and seems unlikely to broaden the conflict beyond Yemen.

In other inflation news, employers covering motoring costs for staff in the United States of America could be in for an expensive surprise. Motor insurance costs rose by over 20% in 2023 and analysts see little sign of increases easing.

Finally, as Argentina's annual inflation tops 200%, the central bank has announced it will soon create new 20 000 and 50 000 peso banknotes.

Like this article? Share it... Twitter Facebook   LinkedIn