As in the United States, policymakers in other countries have become increasingly wary of rising inflation. Recovery of the economy from the epidemic was expected to ease inflation, but rising energy and food prices continued to push up inflation around the world.
After Russia invaded Ukraine, predictions about the future of inflation were dashed and much more was restored in light of rising commodity prices. The war has raised concerns about the stability of energy supplies from Russia, which is crucial for Europe, and has disrupted food production, increasing the risk of a global hunger crisis. Meanwhile, supply chains are burdened by epidemic-induced barriers, and demand for some products is still stronger than manufacturing.
High inflation rates are widespread: In the United States, the euro area and other so-called developed economies, 60 percent of countries have an annual inflation rate of more than 5 percent, according to the Bank for International Settlements, a bank for central banks. This is the largest share since the 1980s and a serious problem for central banks, which typically target inflation at 2 percent. In emerging economies, inflation is above 6 percent in more than half of the countries, the bank said. For now, China and Japan are notable exceptions.
“We are on the brink of a new era of inflation,” said Augustine Carstens, head of the bank, last week. “The forces behind high inflation may continue for some time.”
After more than a decade of central and European central banks raising their targets to keep inflation in check, policymakers are suddenly struggling to contain it. Energy and food prices are often volatile, but central bankers are concerned that price increases will spread to other products and services, after which workers will demand higher wages to cope with higher living costs.
Inflation in Britain is the highest in three decades. Prices rose 6.7 percent in March from a year earlier, with economists surveyed by Bloomberg expecting data released on Wednesday. The Bank of England has already raised interest rates three times since their pre-epidemic levels in December, amid growing evidence that companies are responding to rising prices, including higher wages.
In the eurozone, annual inflation rose to 7.5 percent in March from 5.9 percent the previous month. High energy prices are the main driver of inflation there, much less signs of significant wage growth. But the European Central Bank plans to end its massive bond-buying activities to pave the way for interest rate hikes, as “inflation becomes more broad-based and more stable,” according to its latest policy meeting, policymakers will meet again this week.
Even in Japan, which has struggled with very low or negative inflation rates for decades, there are signs that high prices have reached its shores. Last month, an official survey of consumers’ one-year inflation expectations rose 2.7 percent, the highest since 2014.