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Inflation round-up

Headlines around the world warned this week of soaring oil prices, following attacks on Saudi Arabian oil production facilities by as-yet-unknown assailants using rockets and drones. But oil prices have rapidly fallen back again, as it became known that the damage done wasn't as bad as had been feared.

Brent Crude jumped from USD60 to USD68 per barrel in the immediate aftermath of the attacks, but only a few days later, on 18th September, slid back to USD64. Furthermore, the price a year ago was over USD70. As most inflation indices are based on a 12-month period, the effect of recent events is likely to be minimal. However, as always, please do contact ECA if you need assistance with protecting your international assignees' purchasing power.

Pakistan was the only newcomer to our table of high-inflation countries this month. The fast rise in cost of living there is due to various factors, the main ones being a substantial hike in fuel prices, as we detailed in May, and currency depreciation.

High-inflation countries (CPI 10%+)
Country CPI % Last reported Trend IMF 2019 forecast %
Angola 17.6 Jul-19 ► Stable 17.5
Argentina 54.4 Jul-19 ► Stable 43.7
Ethiopia 15.5 Jul-19 ▲ Rising 9.3
Haiti 19.1 Jul-19 ▲ Rising 14.9
Iran 41.6 Aug-19 ▼ Falling 37.2
Liberia 23.3 Apr-19 ► Stable 22.3
Nigeria 11.4 Jul-19 ► Stable 11.7
Pakistan 11.6 Aug-19 ▲ Rising 7.6
Sierra Leone 17.5 Mar-19 ► Stable 15.8
South Sudan 51.9 Apr-19 ▼ Falling 24.5
Sudan 53.1 Aug-19 ▲ Rising 50.0
Turkey 15.0 Aug-19 ▼ Falling 17.5
Uzbekistan 14.3 Dec-18 ► Stable 16.5
Venezuela 282 972.8 Apr-19 ▼ Falling 10 000 000.0
Zimbabwe 230.4 Jul-19 ▲ Rising 73.4

The government of Cuba has imposed price controls on numerous items, including many foodstuffs, haircuts and taxi fares, in an effort to control inflation. The move is a blow to hopes of greater economic freedoms and to the fragile young private sector in particular, whose participants may now struggle to produce profits from what they sell. Price controls have a very poor record of success, because they tend to stifle local production, increasing shortages, and can result in a black market developing - just look at Venezuela's experience. Cuba only publishes inflation statistics annually (latest 5.9% at end-2018). ECA produces its cost of living indices for expatriate staff in Cuba every six months.

In China, which has seen annual inflation jump from only 1.5% in February 2019 to a latest of 2.8% in August, the epidemic of swine fever, and the main cause of rising prices, shows no sign of abating. Pork is eaten in huge quantities in China and carries a big weighting in the calculation of inflation there. Further increases in indices are forecast.

Finally, here is our regular inflation watch list:

On watch! (notable rise in inflation, but below 10%)
Country Latest CPI % Data month Up from
Gambia 7.4 Jun-19 6.1% Mar-19
Moldova 5.5 Aug-19 4.4% Jun-19
Mongolia 7.6 Jul-19 6.6% Mar-19
Myanmar 9.5 Jun-19 7.9% Mar-19
Nepal 6.0 Jul-19 4.4% Apr-19
Zambia 9.3 Aug-19 8.1% May-19
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