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Inflation worldwide - Statistics & Facts

Inflation is the phenomenon of prices increasing for all goods. Most central banks have a target of low and constant inflation, generally between 1.5 and four percent per year. However, since the end of 2021, global inflation has been rising, as seen in many of the world's regions. High inflation can lead to lower purchasing power, as prices tend to grow before wages, and those with savings or living on a fixed income see their buying power erode. Hyperinflation, the extreme example of this phenomenon, can lead to total economic collapse as the currency loses value so quickly that it essentially becomes worthless. Negative inflation, commonly called deflation, is also a problem because the falling prices mean that companies and financers are forced to save money, leading to decreased wages, layoffs, unemployment, and delayed investments.

Ways of measuring inflation

Inflation in often measured by the consumer price index (CPI), which measures the total price of a fixed basket of goods and services over time. This represents a measure of costs that consumers face, calculated to represent how much changing prices affects consumers. However, those more interested in business look to the producer price index (PPI) or others, which represent the costs of firms and may influence financial markets differently. Because each sector experiences inflation in a different way, many analysts also look at the CPI in their selected industries. Similarly, different people have different economic interests. Older generations, more interested in the changing price level due to their tendency to live on a fixed pension, tend to consider inflation to be a greater concern than younger people.

Coronavirus, war in Ukraine, and inflation

The aftermath of the Coronavirus pandemic was accompanied by high inflation levels, starting in the latter half of 2021. As production and transport was brought to a halt in 2020, it took time to bring production to a normal level as demands increased. Moreover, China's continued no-covid strategy, with lockdown of complete cities such as Shanghai, results in continuing production dusruptions.

Furthermore, the Russian invasion in Ukraine in February 2022 further spurred global inflation, affecting especially certain food products such as wheat and corn, as well as energy sources such as natural gas, which can be observed in the chart above. The rising inflation and leaping energy bills mean that people increasingly struggle with making ends meet, and higher fuel costs will probably lead to manufacturers increasing their prices further, meaning that it is rather unlikely to see the inflation pressures ease in the coming months.


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