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Inflation rates by country: How does America stack up?

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main learning points

  • US inflation is currently at 7.7%, which remains high by historical standards.
  • However, on a global scale, this seems almost insignificant as some countries are currently experiencing inflation rates above 200%.
  • At the other end of the spectrum, many Asian countries have managed to keep inflation below 2%.

We don’t hear much about inflation right now, but that doesn’t mean it hasn’t gone anywhere. In the United States, it may have started to decline, but it’s still at a near-record high.

October’s rate of 7.7% is still the highest we’ve seen since 1982, ahead of 2022.

With the Fed determined to cut rates, we’ve seen four consecutive rate hikes of 0.75 percentage points. This is the fastest growth in 35 years, with further growth almost certain in the next 12 months.

So while it seems like inflation is starting to take a turn in the US, it continues to rise in many other countries around the world.

Many economies have been hit by rising prices in the wake of the pandemic, but there have been some notable outliers that have managed to keep inflation low.

So where is America in the grand scheme of things?

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countries with the highest inflation rates

While we are not very happy with inflation moving from high single digits to low double digits, we are actually doing quite well compared to the hardest hit countries. Now apparently most of the places with the worst inflation rates in the world are experiencing serious economic turmoil.

Such high inflation rates do not occur in fully functioning economies, and many countries revert to using the US dollar when their own currency depreciates too quickly. This could eventually lead them to abandon their currency altogether and create a new one or stick with the dollar for good.

However, this is not good news for the people who live there.

Zimbabwe +269%

The African country has been struggling with high inflation rates for decades. From figures between 20% – 50% in the 1990s to over 500% in the early 2000s and then so high that after 2008 they are practically incomparable.

They experienced extreme hyperinflation during this time, at a rate of 79,600,000,000% per year with an estimated peak in November 2008. month,

With that history in mind, current inflation doesn’t actually look that bad. It is also falling, with the Zimbabwe Treasury forecasting that inflation could drop to double digits by 2023.

Lebanon +158%

Lebanon is in an ongoing financial crisis and the currency seems to be falling as a result. The country’s financial sector is facing massive losses, but the World Bank has said these are too great to bail out.

The current financial gap is $72 billion, more than three times Lebanon’s total GDP.

It is estimated that three-quarters of the country’s population has been pushed into poverty by the criticism, and it doesn’t look like it will end anytime soon. Lebanon’s GDP will fall by 58% between 2019 and 2021, wiping out 15 years of economic growth.

The World Bank is working on a way out of the situation, but it is unlikely to be easy or quick.

Venezuela +156%

Like Zimbabwe, Venezuela has experienced hyperinflation in recent years. In April 2019, the International Monetary Fund predicted that nominal interest rates in the country would reach 10,000,000% by the end of the year, although official figures are hard to come by.

The country has been going through an economic and political crisis since 2016, although high inflation has been prevalent in the country since the early 1980s.

After several years of government spending cuts, there are some signs of temporary economic recovery and budget cuts have helped balance the country’s bill.

other notable examples

Apart from this, many other countries are also experiencing high inflation. Syria (+139%), Sudan (+103%), Argentina (+88%), Turkey (+85.51%) and Sri Lanka (+66%) are some other examples, where 37 countries currently have an inflation rate of less than 15%. run upstairs,

countries with the lowest inflation rates

At the other end of the spectrum, some countries have managed to keep their inflation rates remarkably low. However, as you’d probably expect, the list is much smaller than those with record high inflation.

A striking trend is that almost all countries with the lowest inflation can be found in Asia. Much of this can be attributed to the different consumption habits in this part of the world. A simple example is that Asian cultures eat much more rice than Westerners, with very low levels of wheat-based products in their diet.

Wheat prices are expected to rise by around 17% in the first half of 2022, compared to 8% for rice. There are other examples of falling food prices, such as pork, for reasons unrelated to the COVID-19 pandemic.

And the other important factor, of course, is that life has not returned to normal in many countries in Asia. China is still following a zero-Covid approach, Hong Kong is similarly restrictive and Malaysia is also slow to transition to normalcy. This means that demand has not returned to pre-pandemic levels as in other parts of the world.

As a result, many countries in the region are experiencing low inflation. Some examples are Macau (+1.02%), Hong Kong (+1.8%), mainland China (+2.1%), Oman (+2.39%) and Taiwan (+2.72% ).

It remains to be seen if these countries will be able to maintain these low rates, or if they will simply postpone the inevitable.

how America stacks up

So overall, the US numbers are actually not that bad. Of course prices are rising more than usual and we should all brace ourselves, but we should be thankful that we live in a country where inflation of 8 or 9% is a record high.

In the G20, the US is in the middle of the pack.

China 2.1%

Saudi Arabia 3.0%

Switzerland 3.0%

Japan 3.7%

South Korea 5.7%

Indonesia 5.7%

France 6.2%

Brazil 6.5%

Singapore 6.7%

India 6.8%

Canadian 6.9%

Australia 7.3%

Spain 7.3%

South Africa 7.6%

United States 7.7%

Mexico 8.4%

Germany 10.4%

United Kingdom 11.1%

Italy 11.8%

Russia 12.6%

Netherlands 14.3%

Turkey 85.51%

Argentina 88%

Inflation is a very damaging force that can cause household wealth to evaporate overnight, and poses a major challenge to people living in countries that may be experiencing hyperinflation.

Regardless of the level of inflation, there is really only one way to properly hedge against it. That is, holding your long-term capital in growth assets. Cash in the bank loses value every year, even in stable countries like the US.

What can investors do about inflation?

Many traditional forms of investing, such as real estate and the stock market, will outperform inflation in the long run. This means that the money invested in these assets will grow in value faster than the rate of rising prices, protecting your money during periods of high inflation.

The problem is that these assets have their own drawbacks. Real estate is expensive and illiquid, with high levels of associated taxes and fees associated with buying, selling and simply owning it.

Stock markets, on the other hand, can be very volatile. As we’ve seen this year, stocks can fall significantly in the short term and it can be difficult for investors to stick to a long-term plan while taking large losses on their portfolios.

To help investors who are unsure of what to do in this situation, we have created the Inflation Protection Kit. It is an investment package that harnesses the power of AI to invest in assets that have traditionally been viewed as hedges against inflation.

Each week, our AI predicts which assets within the Kit universe will perform best based on risk adjustment, then automatically rebalances the portfolio to create the optimal mix.

The assets the algorithm considers are Treasury Inflation Protected Securities (TIPS), gold and other precious metals, as well as a basket of commodities such as oil and wheat. These are all assets that hold their value as prices rise.

For investors who don’t want to experience the volatility of the stock market, but still want their funds to keep pace with inflation, this is a great option to consider.

Download Q.ai today To access AI-driven investment strategies.

Also read  Homeowners with variable-rate mortgages are struggling as interest rates rise and home prices fall, the Bank of Canada warns

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