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Inflation round-up

There have been tentative signs that in some countries at least, such as the Philippines, economic recovery from the Covid-19 pandemic might happen faster than previously expected. Indeed, China looks like avoiding recession altogether - one of very few economies likely to do so in 2020. If recoveries do surprise on the upside, they could produce temporary surges in inflation as domestic demand rebounds ahead of production and supply.

There are, however, many exceptions to the quick-rebound forecast. Three of the biggest are Lebanon, Sudan and Surinam, all of which have seen their inflation rates leap higher as their economic crises have accelerated (see first table), and with no recoveries in sight.

Lebanon's economy is in a particularly dire state. Wealth is rapidly being destroyed as parallel-market exchange rates plummet and dollar-denominated savings are paid out only in local currency, making them increasingly worthless. Official consumer-price index inflation has leapt from only 3.2% in November to 56.5% as of end-May. The Covid-19 virus has so far been reasonably well contained, but now it looks like infections are in danger of taking off. Lebanon's crisis deepens.

Sudan's weak fledgling government has struggled since the ousting of long-time dictator, Omar al-Bashir, in 2019 to reform the economy. After decades of poor economic management, Sudan produces little and relies on imports, but with currency values slumping - especially on the black market - inflation has reached unprecedented highs. Food and fuel prices are rising particularly fast.

Surinam, meanwhile, saw its currency outlook downgraded by credit-rating agencies in July, with Fitch now confirming our assessment from last month that a devaluation of the local dollar is becoming extremely likely. Inflation has already jumped from only 4.2% in February to 25.9% at end-May. A currency devaluation would be sure to push the cost of living higher still.

Ghana, GuineaTajikistan and Uruguay also joined our table of countries with double-digit inflation this month, as authorities around the world continued to struggle to contain the economic turmoil unleashed by the coronavirus pandemic. All four have had high single-figure inflation for many months, in any case; Covid-19 has just pushed them over the 10% edge.

High-inflation countries (annual CPI 10%+)
Country CPI % Data month Trend IMF 2020 forecast %
Angola 21.1 May-20 ▲ Rising 20.7
Argentina 42.8 Jun-20 ▼ Falling n/a
Ethiopia 19.8 May-20 ▼ Falling 15.4
Ghana 11.3 May-20 ▲ Rising 9.7
Guinea 11.5 May-20 ▲ Rising 8.5
Haiti 19.5 Aug-19 ► Stable 22.2
Iran 22.5 Jun-20 ▲ Rising 34.2
Lebanon 56.5 May-20 ▲ Rising 17.0
Liberia 25.8 Feb-20 ▼ Falling 13.8
Nigeria 13.0 May-20 ► Stable 13.4
Sierra Leone 15.5 May-20 ► Stable 15.4
South Sudan 69.0 Dec-19 ▼ Falling 8.1
Sudan 136.4 Jun-20 ▲ Rising 81.3
Surinam 25.9 May-20 ▲ Rising 27.9
Syria 13.1 Aug-19 ▲ Rising n/a
Tajikistan 10.0 May-20 ▲ Rising 8.1
Turkey 12.6 Jun-20 ▲ Rising 12.0
Turkmenistan 13.4 Dec-19 ▲ Rising 8.0
Uruguay 10.4 Jun-20 ▲ Rising 8.8
Uzbekistan 14.2 Jun-20 ► Stable 12.6
Venezuela 2296.6 May-20 ▼ Falling 15 000.0
Zambia 15.9 Jun-20 ▲ Rising 13.4
Zimbabwe 737.3 Jun-20 ▲ Rising 319.0

In other news, Turkey's inflation has begun to climb again, having fallen a little in recent months. This is partly because of supply constraints resulting from coronavirus restrictions, but it is also due to a rapid expanse of the money supply as the central bank tries to stimulate demand (under pressure from President Erdogan). Regular readers will know the impact excessive money-printing can have on inflation and some analysts are seriously concerned about Turkey's outlook.

Venezuela still has the world's highest inflation rate, of course, and a big rise in fuel prices, announced last month, could send it higher again.

Finally, here is our watch list, which is, perhaps surprisingly given the global coronavirus turmoil, shorter than usual:

On watch! (notable rise in inflation, but below 10%)
Country Latest CPI % Data month Up from
Burundi 9.2 May-20 7.6% Apr-20
Chad 6.3 Apr-20 4.6% Mar-20
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