- What is the reason for the increase in the global inflation rate in 2022?
- How has the war between Ukraine and Russia affected the increase in the global inflation rate in 2022?
- How much has the US and the EU inflation rate increased after the Ukraine-Russia war?
Four months after the start of the war in Ukraine, the global inflation rate in 2022 has reached its highest level in the last two decades. According to the statements of the head of the European Central Bank, inflation is unlikely to decrease in the short term. Following the Ukraine war, the cost of some goods, including food, has increased in many parts of the world, and this has caused new inflation records in recent weeks.
Increase in inflation after the war between Ukraine and Russia
Although many countries are still far from double-digit inflation, the rates recorded in the past weeks indicate the beginning of a new wave of inflation. Economic experts believe the global inflation rate in 2022 may increase even more. With the start of the war in Ukraine, EU inflation and the US has reached the highest level in the past few decades, so according to statistics, US inflation reached 9.1 percent in June. The increase in the global inflation rate in 2022 has made the daily life of the people of the US more difficult. The inflation rate in this country has increased after Biden took office and has reached its highest level since 1981. US fuel prices rose by more than 17% in May alone. Fuel costs have more than doubled compared to a year ago. Food prices also increased by an average of 10% compared to last year.
Terrible statistics of annual inflation in the EU
Biden is trying to link the increase in the global inflation rate in 2022 entirely to the war in Ukraine. In a meeting with US lawmakers, Federal Reserve Chairman Jerome Powell said that the war in Ukraine is not the primary driver of inflation and before that. Inflation was also high.
However, the situation is not better in the EU than in the US. Statistics show that the annual inflation in this union has reached 8.6 percent, which has increased by half a percent compared to last month. Among the Eurozone countries, Estonia has a record of about 22% inflation. The inflation rate difference between the members of the European currency block has reached an unprecedented figure of 16.2%, which has increased by 2% compared to the previous month. France and Malta have the lowest inflation in the Eurozone, with an inflation rate of 5.8.
Record new inflation records at the global level
Inflation rates in Europe and the US under the shadow of the Ukraine war are still setting new records, so a large part of the media reports these days is dedicated to the issue of the sharp increase in the price of fuel, food and government measures to calm the situation in these countries.
The inflation rate has reached the Oceania continent after Europe and the US, and Australia’s 22-year record of food prices has been broken. Since the beginning of 2022, the gasoline price in Australia has increased by 35%, and the cost of construction and materials has also increased by 13.7%. In the first three months of this year, food prices have also increased due to the cost of transportation, fertilizer, packaging and raw materials.
The sharp increase in food prices
The consumer price index in the US also shows that food prices in the US have reached the highest level since the 1980s. According to a CNN report, the food price index, housing and energy costs, which most people’s income is spent on, and the index of almost all other sectors, have increased significantly.
At the same time, the price of food consumed by the household increased by 12 percent in the year ending May, and this figure was the highest annual increase since 1979. This report states that the highest growth in food consumed in The household is related to dairy products, eggs and meat, where the price of eggs increased by 32.2%, red meat, chicken and fish by 14.2%, and dairy products by 11.8% from May 2021 to May 2022.
Increase the bank interest rate to prevent inflation
To maintain the price of goods and raise the level of employment, the Bank of England has increased the bank interest rate, but this is not an action that will respond quickly and currently. There is a risk Inflation, along with the recession, threatens America. While the Republicans have heavily attacked the Biden government due to the unprecedented increase in inflation, Biden blamed the unparalleled price of oil and gasoline and this unbridled inflation on Putin and his invasion of Ukraine. But the survey results indicate that this statement is not popular among the US people. The Republicans have repeatedly blamed Biden for the increase in prices and believe that his wrong policies and the approval of the $1.9 trillion reserve plan to reduce inflation have caused this problem.
On the other hand, the Democrats also believe that the reduction of the goods supply chain is due to all The Covid-19. the decrease in the price of oil and wheat reserves due to the outbreak of the war in Ukraine are among the causes of increasing inflation in the US. Also, the results of new research in the UK, conducted by the Harvard CAPS-Harris Poll survey released exclusively to The Hill, show that inflation is at the top of the problems and concerns of Britons.
US and EU authorities struggle to deal with rising inflation.
In the past weeks, the heads of the central banks of the US, UK and the EU held a meeting to discuss the issue of inflation. In this meeting, the President of the European Central Bank, Christine Lagarde, stated that the inflation expectations in the Eurozone are higher than before and considered it unlikely to reach low inflation numbers in the short term.
Legarde added that the European Central Bank was not alone in being wrong about inflation! Jerome Powell, Federal Reserve Chairman, also considered the war in Ukraine an obstacle to returning to the era before the Covid-19 pandemic. He added that he hopes to control inflation by increasing the interest rate. However, this return will be challenging and slow. Andrew Bailey, head of the Bank of England, listed the two factors of war and energy as the most critical challenges facing his country’s economy. He called for more cooperation from European allies to end the current situation.
Double-digit inflation in more than a third of the EU
The increase in energy costs has had the most significant impact on countries close to Russia’s borders. For example, inflation in Estonia, which previously cut itself off from Russian gas but is now exposed to market swings in energy prices, rose at an impressive annual rate of 21.9 percent, almost double the 11 per cent recorded in January. Statistics show that double-digit inflation has spread to more than a third of the EU. With the continuation of these conditions, further expansion is possible.
The world is engaged in registering new inflation records, which has caused many countries that were able to control inflation to a certain extent to face the return of inflation. Some food items and gasoline have seen price increases of 40, 50% and more in European countries, and it is said that the current inflation in these countries has been unprecedented in the last 40 years. Inflationary expectations for the US and EU economies next year are now seen, and consumers expect inflation to continue to rise next year.