US inflation rate is in the middle of the pack globally

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Data: Moody’s Analytics, OECD and trade economics; Diagram: Baidi Wang/Axios

inflation in the US is at a 40-year high, but America is not alone. Rising prices are a truly global phenomenon.

The big picture: An inflation analysis by Deutsche Bank in 111 countries places the USA in the middle. In these countries, the median inflation rate of 7.9% year-on-year more than doubled from 3.0% a year ago, mainly due to rising energy and food prices.

Inflation rates from May in Western European countries such as the Netherlands (+8.8% yoy) and Germany (+7.9%), roughly on par with the US (+8.6%).

As in the US and much of the world, sky-high energy prices, exacerbated by the war in Ukraine, were a key driver of inflation in Europe. According to the Bureau of Labor Statistics, US energy prices are up 35% year over year.

  • They are even higher (+51%) in the UK which, like the US, recently experienced its highest rate of inflation (+9.0%) since the early 1980s, according to the Financial Times. The UK’s bleak economic outlook is fueling concerns over a cost of living crisis.

Cancel: While inflation is generally high around the world, it is lower in major Asian economies such as China (+2.1%) and Japan (+2.5%) – although both countries have seen upward trends this year.

  • After years of very low inflation, Japan should finally reach the central bank’s target of 2% this year. But wages are stagnant and consumers are not used to rising prices, according to the BBC.
  • China’s lower inflation is partly explained by Beijing’s relatively limited stimulus during the pandemic, strong price controls and weak consumer demand, according to the WSJ.
  • South Korea, on the other hand, experienced the sharpest increase in inflation in 14 years to 5.4% in May. President Yoon Suk-yeol warned of a coming economic “typhoon” via FT on Friday.

While countries around the world including South Korea raising interest rates to curb inflation, Turkish President Recep Tayyip Erdoğan has insisted on rate cuts.

  • Turkey’s official inflation rate of 74% is the highest in the G20 and in reality is probably even higher.
  • In second place is Argentina (+58%), which prints money to cover its deficit.
  • Several of the largest economies in Latin America and Africa are also experiencing double-digit inflation rates.

Something to see: Food commodity prices are at a record high, according to the World Bank Index, and have risen sharply since the Russian invasion of Ukraine in February. The double rise in energy and food prices is hitting developing countries particularly hard.

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