Inflation round-up

For the first time in many months, our high-inflation table is shorter - just! - than it was the last time, with more countries seeing official inflation drop back below 10% than there were joiners. Furthermore, many countries remaining on the list saw their inflation trends change from rising to falling or steady.

If these are signs that global inflation has at last peaked, Western Europe, at least, has failed to notice - seven of the eight newcomers to the table were from that region: Austria, Belgium, Denmark, Germany, Italy, Portugal and the United Kingdom all saw their consumer price index changes soar into double figures, joining numerous other European states already witnessing those levels of price rises. However, even in Europe, there are indications that the worst might be over. The biggest factors driving European inflation in recent months have been energy, fuel and food costs, but all three have seen prices falling of late, although they remain volatile. Interestingly, services prices have barely budged in the last three months in the Eurozone.

With inflation so high, central banks such as the European Central Bank and Bank of England may need to accelerate their current run of interest-rate hikes. That would be likely to produce rebounds in the euro and pound over the next few months, at least in relation to the US dollar - inflation has begun to fall in the United States. The combination of stronger currency and still-high inflation could mean significant cost-of-living uplifts are needed to protect expatriate staff spending power in Europe come ECA's March 2023 survey. If so, they would reverse largely negative cost-of-living adjustment trends in the September 2022 survey, which is being published as I write.

As always, we will keep you posted in the blog, but if you need assistance with these or any other aspects of managing your international assignees, do please get in touch.