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Inflation round-up

The lights may not be going out all over Europe, as some of the more lurid media have suggested lately, but gas prices are certainly going up across the continent. A complex combination of supply problems and surging demand has seen wholesale gas prices rise by a whopping 250% this year in the United Kingdom, the worst-hit country. Because of price caps, consumers will be protected to some degree (although energy companies are going out of business), but nevertheless inflation is likely to continue its strong upward trend because of the energy issue. 

Indeed, inflation is resurgent not just in Europe but around the world. Whether it's global house prices increasing at their fastest rate since 2005, as people move home en masse due to excess savings and new Covid-induced working patterns; shipping costs between China and the United States up tenfold; weather shocks in Brazil and elsewhere forcing commodity prices up; efforts to stop the climate crisis causing 'greenflation'; or global food prices hitting a ten-year high, there is no doubt that indicators of future prices are mostly pointing in one direction. Interestingly, though, analysis of inflation in the United States recently showed that the situation there, at least, was more nuanced, with some prices going down rather than up (and iron ore tumbled 20% earlier this week!), reflecting what is in reality a period of great disruption in the global economy rather than a one-way ticket towards rampant cost of living increases. The jury is still very much out on whether higher inflation will be transitory or more permanent.

Whatever the future, indices for international assignees are already being affected by the global inflation surge. However, it is always worth reminding ourselves that, with global mobility the factors used to calculate changes in purchasing power are relative, being a comparison of conditions in both the home and host countries. So, when prices are rising everywhere, both of the relevant locations might be equally impacted, meaning less of an effect on the index. However, with an inflation surge as potent as this one there is no doubt that the potential for both volatility and big differences between countries is greatly increased. Emerging markets seem particularly at risk of short-term impacts, especially on food prices. Do please get in touch if you need advice on remunerating your expatriate staff, wherever they are.

Our tables below reflect the extent of the inflation wave currently sweeping the globe. There are no fewer than four newcomers to the high-inflation table, being Burundi, Georgia, Sierra Leone and Ukraine, while our watch-list table further down has never been longer. Another startling statistic is perhaps even more persuasive of the unprecedented inflation situation we are seeing: at the start of the year, there were 54 countries reporting deflation (i.e. falling prices); now, there are only nine.

High-inflation countries (annual CPI 10%+)
Country CPI % Data month Trend IMF 2021 forecast %
Angola 29.7 Aug-21 ▲ Rising 22.3
Argentina 51.8 Jul-21 ▲ Rising n/a
Burundi 10.5 Aug-21 ▲ Rising 4.1
D R Congo 20.4 Jan-21 ► Steady 10.9
Ethiopia 30.4 Aug-21 ▲ Rising 13.1
Georgia 12.8 Aug-21 ▲ Rising 3.8
Guinea 12.2 Jun-21 ► Steady 8.0
Haiti 17.2 Mar-21 ▼ Falling 20.5
Iran 43.2 Aug-21 ▼ Falling 39.0
Kyrgyzstan 14.6 Jul-21 ▲ Rising 8.6
Lebanon 100.6 Jun-21 ▼ Falling n/a
Nigeria 18.0 Jul-21 ► Steady 16.0
Seychelles 10.6 Jul-21 ► Steady 3.7
Sierra Leone 10.5 Jul-21 ▲ Rising 15.5
South Sudan 18.3 Jun-21 ► Steady 40.0
Sudan 422.8 Jul-21 ▲ Rising 197.1
Surinam 54.0 Jul-21 ▲ Rising 52.1
Syria 139.5 Aug-20 ▲ Rising n/a
Turkey 19.3 Aug-21 ▲ Rising 13.6
Turkmenistan 10.0 Dec-20 ▼ Falling 8.0
Ukraine 10.2 Jul-21 ▲ Rising 8.6
Uzbekistan 11.1 Jul-21 ► Steady 5.0
Venezuela 2719.5 May-21 ▼ Falling 5500.0
Zambia 24.6 Jul-21 ► Steady 17.8
Zimbabwe 56.4 Jul-21 ▼ Falling 99.3

Here is the watch list:

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

Country Latest CPI % Data month Up from
Armenia 8.8 Aug-21 6.5% Jun-21
Azerbaijan 5.9 Jul-21 4.7% Jun-21
Belarus 9.8 Jul-21 8.6% Apr-21
Botswana 8.8 Aug-21 6.2% May-21
Cyprus 5.0 Aug-21 4.0% Jul-21
Egypt 5.5 Jul-21 4.1% Apr-21
Estonia 5.0 Aug-21 3.6% May-21
Ghana 9.7 Aug-21 7.8% Jun-21
Guyana 6.9 Jun-21 3.8% May-21
Iraq 7.4 Jul-21 5.6% May-21
Jamaica 5.4 Jul-21 4.4% Jun-21
Kazakhstan 8.7 Aug-21 7.2% May-21
Lithuania 5.3 Aug-21 3.6% May-21
Madagascar 6.7 Jun-21 5.4% Apr-21
Mauritius 6.5 Jul-21 2.3% May-21
Mongolia 7.4 Jul-21 6.2% May-21
Paraguay 5.6 Aug-21 4.5% Jun-21
Peru 5.0 Aug-21 4.0% Jul-21
Russia 6.5 Jul-21 5.5% Apr-21
Sri Lanka 6.8 Jul-21 5.5% Apr-21
Togo 6.8 Jul-21 3.7% May-21
Tonga 6.8 Jul-21 3.3% Mar-21
Uruguay 7.6 Aug-21 6.6% May-21
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