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Inflation round-up

ECA International

For the first time in many months, our 'Global inflation indicators' table (first table below) is showing positive year-on-year changes, rather than the universally negative ones we've been used to. Both the Brent Crude oil price and the United Nations' 'Food price index' have gained in the last year, although the IMF's 'All-commodities index' remains marginally in the red.

With household incomes surging in the United States, where unemployment continues to fall, the likelihood of another interest rate rise there is growing. These are indications, hopefully, of a return to more 'normal' global economic conditions, with a possibility of higher inflation, after what has been an unprecedented period of disinflation.

Global inflation indicators
Indicator Latest Recorded One year ago Y-o-y change
Average global CPI inflation* 8.34% 12/09/16 4.02%  
Oil price (Brent Crude) $47/brl 14/09/16 $46 +1%
All-commodities index (IMF)
(2005 = 100)
102.6 01/09/16 104.2 -2%
Food price index (UN-FAO)
(2002-04 = 100)
165.6 01/09/16 155.0 +7%
*Based on 186 ECA Cost of Living countries; no account taken of relative weightings. Extracting South Sudan and Venezuela, average global inflation is only 3.83%.

Some other recent news items have also pointed towards higher inflation. The La Nina weather phenomenon is expected to push food prices up even further in several parts of the world, notably Indonesia. In the United Kingdom, where the pound has depreciated following the referendum vote to leave the EU, airfares have already risen and other inflationary headwinds are looming, although the full effects will depend on companies' willingness to absorb higher import costs themselves, rather than passing them onto consumers.

On the other hand, however, bumper harvests in the US, Russia and elsewhere should reduce many other food prices. Furthermore, most recent projections for oil prices are negative. The Organisation of the Petroleum Exporting Countries (OPEC), said this week that the world was "awash" with oil supplies and that the glut would likely persist well into 2017. Meanwhile, the International Energy Agency (IEA) recently forecast lower energy prices based on a worsening outlook for demand.

For now, at least, record numbers of countries continue to experience deflation (47) or very low inflation of between 0% and 1% (35) and it is by no means certain that this situation will change soon.

There were no additions to our 'High-inflation countries' table this month. Please note that the data from Venezuela is very out of date. The crisis-hit government has not published inflation figures since the end of 2015, but Forbes estimated the actual level of inflation at end-July 2016 to be 773%! That would put it even higher than South Sudan.

High-inflation countries (CPI 10%+)
Country CPI % Last reported Trend IMF 2016 forecast
Angola 31.8 Jul-16 ▲ Rising 19.1
Argentina 14.3 Oct-15 ► Stable n/a
Azerbaijan 10.9 Jun-16 ▲ Rising 12.8
Belarus 12.0 Jun-16 ▼ Falling 13.6
Egypt 14.0 Jul-16 ▲ Rising 9.6
Ghana 16.7 Jul-16 ▼ Falling 15.7
Haiti 13.9 Jun-16 ▼ Falling 12.6
Kazakhstan 17.0 Jun-16 ▲ Rising 13.1
Malawi 19.0 Jun-16 ► Stable 19.7
Mozambique 20.7 Jul-16 ▲ Rising 6
Nepal 10.5 Jul-16 ► Stable 10.2
Nigeria 18.9 Jul-16 ▲ Rising 10.4
South Sudan 661.3 Jul-16 ▲ Rising 212.4
Sudan 16.5 Jul-16 ▲ Rising 13
Surinam 58.0 Jun-16 ▲ Rising 36.8
Uruguay 10.0 Jul-16 ► Stable 9.4
Venezuela 180.9 Dec-15 ▲ Rising 481.5
Zambia 20.2 Jul-16 ► Stable 22.5

Finally, here is this month's watch list:

On watch! (notable rise in inflation, but below 10%)
Country Latest CPI Data month Up from
Algeria 7.5% Jul-16 6.1% May-16
Colombia 9.0% Jul-16 7.9% Apr-16
Fiji 5.5% Jul-16 3.8% Apr-16
Kenya 6.3% Aug-16 5.0% May-16
Namibia 7.0% Jul-16 5.3% Jan-16
Rwanda 6.9% Jul-16 5.6% Jun-16
Turkey 8.8% Jul-16 7.6% Jun-16
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