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Inflation round-up

In our last round-up two months ago, there were tentative signs that global inflation might have peaked. Then came Russia's attack on Ukraine.

The war on the ground there may have come to some sort of stalemate, but it continues to reverberate around the world in the form of inflationary pressures. Russia is one of the world's great exporters of natural resources - not just oil, gas and grains, but also iron, coal, aluminium, nickel and wood - and of the products it makes from them, including fuel, plastics, steel, fertilisers and machinery. Ukraine is also a big exporting country, mainly of cereal crops, sunflower oil, iron, steel, machinery, computers and wood. Because of the fighting (in Ukraine's case) and sanctions (in Russia's) a greatly diminished supply of these products and commodities is reaching international markets, increasing scarcity and sending prices considerably higher.

The effects can be seen almost everywhere. As shelves empty, panic-buying has been reported in numerous countries, especially in Europe, and Russia itself, but also in Hong Kong (although there it has mainly been due to strict anti-Covid restrictions). Food shortages are evident across much of Africa and the Middle East, with Algeria, Cameroon, Egypt, Lebanon, Morocco, South Africa, Tunisia, Turkey and others all to a large extent dependent on Russian and Ukrainian wheat and other grain supplies. Historically, high prices for bread, or a lack of it, have been major causes of social unrest. Furthermore, the situation could worsen as trade in both animal feed and fertilisers for future crops has been seriously reduced.

Energy prices, meanwhile, have soared even higher. Utility bills are more than doubling across Europe and are especially alarming in the United Kingdom, which for complex reasons is facing its own particular cost-of-living crisis this spring and summer - people there could be tipped over the edge by the rising price of beer, as malting barley costs double! Fuel prices are also making hardship and dissatisfaction worse across the globe, especially as wages don't appear to be rising as fast as inflation, particularly in Europe, Asia and Australasia.

With employers unable or unwilling to make up shortfalls in people's buying power, governments are stepping in with various measures, from sales tax cuts in Turkey and elsewhere in Europe to price caps and subsidies in Pakistan. Central banks are trying to contain inflationary pressures by lifting interest rates, including in the United States, United Kingdom and Taiwan recently.

For global mobility teams trying to manage international employees' purchasing power, such sharp increases in inflation can complicate calculations. It might be easier if inflation rates were increasing at the same rate everywhere, but there are big differences between regions. Consensus Economics, for instance, forecasts average consumer-price inflation for 2022 at only 2.4% in Asia/Pacific, but 3.5% in Western Europe, 5.1% in North America, 8.9% in Latin America (ignoring Venezuela) and 10.6% in Eastern Europe. The good news is that most inflationary factors currently are due to temporary phenomena and all of the Consensus Economics forecasts are lower for 2023. It is notable too that only goods prices are really rising - services indices are stable. Unfortunately, temporary doesn't always mean short-lived, and it is impossible to predict how long Vladimir Putin will choose to keep bringing death and destruction to Ukraine. While the crisis continues, expect not just prices to be volatile, but exchange rates too. Some big cost-of-living adjustments might be needed for expatriate staff in the months ahead.

High-inflation countries (annual CPI 10%+)

Country CPI % Data month Trend IMF 2022 forecast %
Angola 30.4 Dec-21 ▲ Rising 14.9
Argentina 50.9 Dec-21 ► Steady n/a
Azerbaijan 12.5 Jan-22 ▲ Rising 3.2
Belarus 10.5 Jan-22 ► Steady 8.2
Botswana 10.6 Jan-22 ▲ Rising 5.0
Brazil 10.1 Dec-21 ► Steady 5.3
Bulgaria 10.0 Feb-22 ▲ Rising 1.9
Burundi 12.3 Jan-22 ▲ Rising 4.6
Cuba 23.3 Jan-22 ▲ Rising n/a
Czech Republic 11.1 Feb-22 ▲ Rising 2.3
Estonia 12.0 Feb-22 ▲ Rising 4.9
Ethiopia 34.5 Jan-22 ► Steady n/a
Georgia 13.7 Feb-22 ► Steady 5.4
Ghana 13.9 Jan-22 ▲ Rising 8.8
Guinea 12.5 Dec-21 ▼ Falling 9.9
Haiti 24.7 Dec-21 ▲ Rising 15.5
Iran 35.4 Feb-22 ► Steady 27.5
Kyrgyzstan 11.2 Jan-22 ▼ Falling 7.8
Lebanon 239.7 Jan-22 ▲ Rising n/a
Lithuania 12.4 Jan-22 ▲ Rising 2.8
Malawi 12.1 Jan-22 ▲ Rising 9.0
Moldova 16.6 Jan-22 ▲ Rising 5.8
Mongolia 13.4 Dec-21 ▲ Rising 7.3
Nigeria 16.2 Jan-22 ► Steady 13.3
Pakistan 13.0 Jan-22 ▲ Rising 8.5
Samoa 10.8 Jan-22 ▲ Rising 2.7
Sierra Leone 17.9 Dec-21 ▲ Rising 13.3
South Sudan 13.2 Dec-21 ▲ Rising 24.0
Sri Lanka 14.0 Dec-21 ▲ Rising 6.3
Sudan 318.2 Dec-21 ▼ Falling 41.8
Surinam 63.3 Dec-21 ▲ Rising 31.7
Turkey 54.4 Feb-22 ▲ Rising 15.4
Turkmenistan 12.5 Dec-21 ▲ Rising 13.0
Ukraine 10.0 Jan-22 ▼ Falling 7.1
Uzbekistan 10.0 Dec-21 ► Steady 10.9
Venezuela 340.0 Feb-22 ▼ Falling 2000.0
Zambia 15.1 Jan-22 ▼ Falling 19.2
Zimbabwe 60.6 Jan-22 ► Steady 30.7

It is no surprise that our regular table (above) of double-digit inflation countries is longer than ever. Botswana, Bulgaria, Burundi, Cuba, Czech Republic, Estonia, Lithuania, Malawi, Samoa, South Sudan and Turkmenistan all joined the list.

In other inflation news, Qatar appears to be preparing to introduce VAT finally, having agreed to do so alongside other Gulf Cooperation Council members way back in 2016. No date has yet been set, though.

Kuwait was also party to the GCC agreement and looks on course to introduce 5% VAT on 1 January 2023.

Finally, below is our regular watch-list, which surprisingly perhaps is significantly shorter than last time, so maybe those tentative signs of peaking inflation I mentioned at the start had some substance to them after all.

On watch! (notable rise in inflation, but below 10%)

Country Latest CPI % Data month Up from
Belgium 8.0 Feb-22 5.7% Dec-21
Bosnia 7.4 Jan-22 5.3% Nov-21
Burkina Faso 8.0 Dec-21 5.9% Nov-21
Cape Verde 7.1 Feb-22 5.4% Dec-21
Colombia 8.0 Feb-22 6.9% Jan-22
Cyprus 6.6 Feb-22 5.4% Jan-22
Egypt 8.8 Feb-22 5.9% Dec-21
Iceland 6.2 Feb-22 5.1% Dec-21
Macedonia 7.6 Feb-22 4.9% Dec-21
Mali 8.7 Jan-22 5.9% Nov-21
Mauritania 6.0 Jan-22 4.6% Nov-21
Mauritius 9.0 Feb-22 7.4% Jan-22
Montenegro 6.7 Feb-22 5.7% Jan-22
Paraguay 9.3 Feb-22 7.9% Jan-22
Slovakia 9.0 Feb-22 5.8% Dec-21
Slovenia 6.9 Feb-22 5.8% Jan-22
Togo 7.4 Jan-22 6.2% Dec-21
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