Inflation round-up

There isn't a great deal of inflation news to report from the last couple of months, but it looks like there will be plenty to come before long. The vast majority of countries have continued to see price trends settle, hoping the alarming cost of living highs of 2022 and 2023 are finally behind them. Several signs suggest, however, that inflation could rear its ugly head again in many places in the not too distant future.

One sign is that our table of countries with double- or triple-digit inflation (see below) has grown for the first time in many months. Chad, Niger and Uzbekistan all joined, with only Liberia falling off, having brought its inflation below 10% (Myanmar was removed because its latest reported annual figure is out of date, being more than a year old).

Another problematic sign for inflation is that global shipping costs are soaring again. Reported congestion in many ports, such as Singapore, show the ripple effect that Houthi missile attacks on vessels in the Red Sea are having. So many ships have had to be re-routed that bottlenecks are appearing in ports around the world. The added fuel costs are only part of the story. Increased pirate attacks, instability in the Middle East and elsewhere, and drought (near the Panama Canal especially) are all adding to the strain on shipping. None of these issues looks like being solved soon.

Climate heating is another major problem we will have to live with long term. Among its many devastating effects is a propensity to push up food prices. Whether its torrential rain, harmful winds or extreme heat, crop yields across the globe are being decimated, causing supply shortages and driving up prices. Oranges in Brazil, cocoa in West Africa, olives in southern Europe and coffee in Vietnam are just some of the food commodities to have suffered from the changing climate in the last 12 months. 

Forecasts for other commodities are more mixed, with the World Bank's latest Commodity Markets Outlook report showing that overall commodity prices remain 38% above pre-pandemic levels, but also suggesting they may fall a little before the end of 2025. Some, like copper, gold and oil, are expected to see higher prices over the period.

As if all this were not bad enough, there is the increasingly likely second coming of Donald Trump as US president to contend with. If he is elected in November, opponents say he too could have devastating effects, one of which could be significantly higher inflation, not only in the United States, but also the rest of the world. It is easy to see how the low-tax/high-tariff programme Trump advocates could send prices flying higher.

Plenty more inflation news to come in future bulletins, therefore. It doesn't look like I'll be out of a job anytime soon!