There are several reasons for the current global inflation. Some of these reasons include rising energy and petrol prices, goods shortages, increased shipping costs, rising wages, climate impact, trade barriers, and the end of pandemic support. At its root, inflation is driven by too much demand relative to supply.
- Different countries are taking different measures to tackle inflation. Some of the common measures include monetary policy, supply-side policies, fiscal policy, exchange rate policy, income policies, and targeting money supply.
- The Bank of England is expected to raise interest rates to reduce inflation. Canada has been successful in controlling inflation by targeting it accurately and keeping it within a specific range.
- Asian countries are also taking measures to tackle soaring inflation.
- According to the International Monetary Fund (IMF), global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 20241.
- This rise in inflation is pushing up the prices of essential goods such as food, transport, and utilities, and more than two-thirds of people around the world are feeling the squeeze.
Some central banks have raised interest rates or reduced monetary stimulus to curb growing inflation. These measures may hinder economic development or raise borrowing costs. Global inflation has several effects on enterprises, governments, and consumers. Thus, policymakers and experts continue to closely monitor inflation patterns and determine how to manage rising price threats. To know more read our report on ‘Global Economic Prospect 2023’.