Inflation round-up

Over the past 15 months or so, our regular table showing countries with double-digit inflation has grown ever larger... until now. Eight countries left the list (see below), having brought official annual inflation rates below ten percent, while only five (Barbados, Cape Verde, Central African Republic, Iceland and South Sudan) joined. A deficit of three is a minor change, admittedly, given there are 68 countries in the table, but hopefully it is a significant indicator of lower global inflation ahead. Analysts remain split (aren't they always?) but perhaps now a majority appears to think indices will continue to fall. Indeed, US Treasury Secretary, Janet Yellen, believes low inflation is the bigger long-term threat to the world economy, rather than high.

Obviously, many countries continue to struggle with price pressures. A notable milestone was passed in Argentina, where inflation topped 100% in February for the first time in 32 years. While the war in Ukraine has contributed considerably, by pushing energy and food costs up particularly, the government and central bank must share the blame because of a money-printing spree to meet their obligations, which inevitably raises inflation. Policies to boost investment, GDP growth and tax revenues would not only reduce the need for extra cash, but would help to bring down inflation themselves. There are few signs of such measures coming any time soon.

In contrast, Zimbabwe's inflation fell below 100% in February for the first time since March last year. A slightly more stable currency, following reforms has helped, but the main driver behind the better figures has been the increasing dollarisation of the economy. This has helped to stabilise prices and has allowed the central bank to cut interest rates, thereby boosting economic growth.

Finally, it appears increasingly likely that Qatar will at last join other Gulf Cooperation Council states in introducing 5% sales tax (VAT), sometime in the summer of 2023.