As inflation continues to reach 40-year high peaks, the Bureau of Labor Statistics (BLS) issued the latest Consumer Price Index (CPI) for June 2022 on July 13. At an unadjusted 12-month overall increase of 9.1%, the rate increased more than it did in May (1.3% vs. 1.0%) and was higher than the predicted overall index of around 8.8%.
Speaking to Yahoo! Finance, Mark Zandi — chief economist at Moody’s Analytics — said that, although the index was a little higher than many expected, it is starting to have very devastating financial impacts on families.
“It was pretty ugly. For the typical American family, they’re now having to shell out almost $500 more a month to buy the same goods and services that they were purchasing a year ago because of the higher inflation,” Zandi stated. “And just for context, the typical American family makes about 60k a year. So if you do the arithmetic, you get a pretty clear sense of the financial pain and suffering that’s resulting.”
Normally, as goes America, so goes the world. As Financial Times (FT) reports, other nations have been battling their own high rates of inflation over the past year or two. For many nations the current economic conditions are as troubling as America’s.
As FT’s consumer price inflation chart shows, the latest annual percentage change in consumer price index in the U.K. is 9.1%, in Germany it’s 7.6%, in France 5.8% and in Japan 2.4%. All of the aforementioned nations have seen sharp, steady increases in inflation rates since the beginning of 2021.
Yesterday, the Bank of Canada raised its key interest rate by one full percentage point, the largest increase since 1998, per The Globe and Mail. Canada’s inflation rate currently sits at 7.7%, the highest it’s been since 1983.
According to InflationDate.com, the worldwide average inflation rate as of mid-May was 7.4%, increasing from 4.35% in 2021 and 3.18% in 2020. Even countries mired in hyperinflation — like Turkey, Argentina and Lebanon — have seen their countries’ inflation rates skyrocket since the mid-to-late-2020, per the site.
With no real signs of the war in Ukraine waning or prices of energy and food diminishing, consumers should expect the same high level of inflation and goods and services prices well into 2023. Fortunately, FT’s 5-year predictions paint a rosier picture. As many of the world’s central banks impose similar rate hikes — akin to what the Fed is attempting — it is expected that rates will eventually fall to a more acceptable level across the globe.
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