Although generally, global inflation continues to remain relatively stable across our September 2024 Cost of Living Survey, significant price rises and fluctuating currencies continue to cause disruption in some countries. Explaining changes in cost of living indices to your assignees and other stakeholders can be a real challenge, especially when there is economic turbulence at play.
We’ve highlighted some key movers below, providing explanations of the impact of price changes and exchange rate movements over the last six months.
Angola
What has changed?
Inflation in Angola remains high, with prices increasing by 10% between March and September. Over the same period the Angolan kwanza has depreciated, with the local currency falling in value by 11% against the euro and 9% against the US dollar.
What does this mean for expats?
Outbound assignees from the Eurozone and the US will see only minor changes to their indices as the effects of the currency devaluation and rising prices largely offset one another.
Argentina
What has changed?
While inflation in Buenos Aires remains high, further cuts to subsidies on public services by the Argentine government has helped it to slow down significantly since March. In the six months to September, prices have increased by 29% while the peso fell 13% against the euro and 11% against the US dollar.
What does this mean for expats?
With inflation outpacing the fall of the peso, most assignees in Argentina will see their indices rise.
Bangladesh
What has changed?
Following student-led protests in the summer, former Prime Minister Sheikh Hasina resigned and fled the country. With an interim government led by the military left to contend with the effects of the disruption of production and increasing import costs, inflation rose in September to 5%. The taka has sharply depreciated, falling by 10% against the euro since March.
What does this mean for expats?
The depreciation of the taka outweighs the effect of inflation, so assignees are likely to see their indices fall.
Brazil
What has changed?
Thanks to budgetary measures that reversed previous spending freezes and delayed deficit targets further than expected, the Brazilian real depreciated significantly, dropping by 13% against the euro and by 11% against the US dollar. Despite this, inflation rose only slightly and remained low.
What does this mean for expats?
The depreciation of the real outweighs the moderate inflation, so assignees will likely see their indices fall.
Ethiopia
What has changed?
Ethiopia has recently implemented significant economic reforms, allowing the birr to float freely. This policy has led to a huge depreciation, with a fall of 50% against the euro in the six months to September 2024. Over the same period, prices rose by 22%, a pronounced increase compared to the 8% rise in the preceding six months.
What does this mean for expats?
Despite high inflation, the severity of the birr’s depreciation means assignees will see their indices fall considerably.
Ghana
What has changed?
Ghana’s economy remains troubled by severe public debt, a weak currency and high inflation. In the six months to September 2024, the Ghanaian cedi depreciated by 21% against the euro. This contributed to a notable increase in the rate of inflation over the same period, with prices increasing by 10%.
What does this mean for expats?
Assignees will see their indices fall as the currency depreciation eclipsed the impact of inflation.
Kenya
What has changed?
Faced with a fiscal deficit and a debt crisis, the Kenyan government tried to introduce indirect tax increases. This triggered nationwide protests and culminated in the government being forced to scrap these increases and look for other, less politically toxic ways to raise revenue. Despite these economic and political challenges, the Kenyan shilling remained strong between March and September, increasing by 10% against the euro and by 12% against the US dollar. This likely helped to slow inflation, with prices increasing by only 2% in Nairobi.
What does this mean for expats?
Thanks to low inflation and a strong Kenyan shilling, assignees in Kenya will likely see their indices rise.
Mexico
What has changed?
In the summer, Mexico elected Claudia Sheinbaum as the country’s first female president. Following her electoral success, President Sheinbaum’s Morena party ushered in judicial reform which sees judges elected by popular vote. While inflation remains moderate, investor concern surrounding the controversial reform, which has been criticised for potentially undermining judicial independence, has been evidenced by currency depreciation. The peso fell by 14% against the US dollar and by 15% against the euro from March to September.
What does this mean for expats?
Inflation in Mexico is offset by the severe currency depreciation, so most assignees will likely see their indices fall.
Myanmar
What has changed?
Myanmar continues to experience economic instability in the shadow of the 2021 coup. Inflation rose significantly in the six months from March to September, primarily driven by the depreciation of the kyat. Although the official exchange rate has remained steady, depreciating by only 2% against the euro in the same period, the black market rate, which is more commonly used, continues to tumble and diverge from the official rate. ECA has observed the effects of the spiralling blackmarket rate across our basket, including on everyday commodities. The prices of imported goods, however, have been particularly affected, with rising fuel costs contributing. The overall impact has been inflation of 21% in the six months to September.
What does this mean for expats?
ECA’s cost of living indices use the more stable official exchange rate and reflect the rising inflation in Myanmar so assignees are likely to see their indices rise significantly.
Nigeria
What has changed?
Nigeria’s tumultuous economy continues to feel the effects of January’s devaluation of the naira and the resulting high inflation, with prices in Lagos increasing 20% in the six months to September. The devaluation initially led to volatility in the naira but this appears to have stabilised, and the currency depreciated by only 1% against the euro in the six months from March.
What does this mean for expats?
High inflation significantly outweighs the small currency movements and so assignees will see their indices rise.
South Sudan
What has changed?
The ongoing civil war in neighbouring Sudan continues to disrupt South Sudan’s oil industry, upon which it is heavily reliant. Millions have been forcibly displaced by the war, many seeking refuge in South Sudan, which has increased pressure on a country already facing low food security. Consequently, the economic situation in Juba has worsened. Prices have increased by 134% between March and September 2024, a near doubling of the 77% increase seen in the preceding six months. Alongside the high inflation, the South Sudanese pound has weakened, falling by 50% against the euro and 49% against the US dollar over the same period.
What does this mean for expats?
Assignees will see their indices rise significantly, as the effect of the extreme inflation heavily outweighs the impact of the currency depreciation.
Surinam
What has changed?
Between March and September, the Surinam dollar appreciated by 20% against the euro and 23% against the US dollar. The strengthening of the currency was largely driven by the country’s central bank, with the aim of helping to bring inflation under control. The move has been successful in the short-term and in the six months to September prices fell by 2%. However, since the survey, the Surinam dollar has once again plummeted in value back to its March level, which will likely push inflation back up.
What does this mean for expats?
Using the survey exchange rate, the appreciation of the Surinam dollar outweighs the deflation, so assignees in the country will see their indices rise significantly. Using a more recent exchange rate, changes to the index would be small.
Turkey
What has changed?
Turkey’s Central Bank has maintained tight monetary policy and kept interest rates unchanged at 50% since March 2024. This has helped to further unwind Turkey’s inflation spiral. However, prices have still increased by 18% since March 2024 while the lira has depreciated by 10% against the euro over the same period.
What does this mean for expats?
With inflation slightly outweighing the impact of the lira’s depreciation, assignees in Turkey will see moderate increases to their indices.
Post-survey developments
The information in this blog describes the changes up to the September 2024 Cost of Living Survey but in some countries circumstances can change quickly. That is why we carry out extra surveys for high inflation countries (see below) and publish regular blog posts on exchange rate and inflation changes around the world, so you can be prepared for anything.
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ECA's interim surveys
While inflation has fallen in much of the world there are still some countries where it remains very high and it is essential to have up-to-date information.
Fortunately for those managing assignees around the world, ECA surveys high inflation locations quarterly and in December 2024 will cover 9 countries.
We are currently undertaking interim surveys for the following countries due to high inflation expectations: Angola, Argentina, Ethiopia, Ghana, Myanmar, Nigeria, South Sudan, Surinam and Turkey. The results will be available in January 2025.
FIND OUT MORE
If you need advice regarding currency fluctuations, or would like additional information or data on any of the locations included in our survey, please get in touch.
ECA publishes cost of living data for more than 500 locations around the world. Learn more about ECA’s cost of living data by downloading our FREE cost of living white paper which explains how ECA's indices are calculated and applied to protect the buying power of people moving between countries as well as looking at what causes them to change over time.
Our cost of living data is available as part of a subscription or as one-off calculations. It is also built in to ECA’s Build-up, Net-to-Net and Cost Estimate Calculators which enable calculations in seconds. Cost of living data is also pre-populated in ECAEnterprise, our Assignment Management System.
Please contact us to speak to a member of our team directly.