Global | Monetary Policy & Inflation
Inflation. Inflation. Inflation. Central banks are worried about it. Households are feeling it. Governments are fearing it. But which countries are experiencing serious inflation – not 3%, 5% or 8% but double-digit inflation?
Some of the countries are not surprising. Turkey has inflation of 70%, Sri Lanka is at 30%, Nigeria is at 16%, and Romania is at 14%. At the other end of the spectrum, there are countries with still-low inflation. Japan has inflation of 1%, China is at 2% and, surprisingly, Bolivia is at 1%. In the developed world, the US and Germany have inflation of 8%, Sweden is at 6% and France is at 5%.
But this week, a new country entered the double-digit inflation club. No, it is not an emerging market, it is the UK! The latest inflation prints for April showed UK inflation reaching 11% on one measure (RPI). On another measure, CPI, it increased from 7% to 9% and is expected to reach 10% soon – at least according to the Bank of England.
This means that the UK has among the highest inflation rates in the developed world and almost double that of France. Why has the UK got such high inflation? Certainly, re-opening the economy at the same time as an energy shock did not help. Then there is the Bank of England, which tried to ignore the growing inflation problem. And of course, we cannot ignore Brexit. Almost all economists expected it to be inflationary. And for once, they were right.
So, congratulations UK, we have joined the double-digit inflation club along with Ukraine, Nigeria and Sri Lanka.