Inflation is not just happening in the United States. Covid-19 made it a global problem.

In the US, it’s gas and Thanksgiving dinner and holiday toys. In the UK, it’s energy costs and snacks and Uber prices. In Brazil, it is the price of food. In Germany, it’s fuel, rent and electronics.

Consumers around the world are experiencing higher prices for goods and services, and although some reasons for this vary from country to country, inflation is becoming something of a worldwide phenomenon.

In the US, the consumer price index (CPI), which tracks what consumers pay for goods and services, rose by 6.2 percent in October compared to a year ago, the fastest rise since 1990. But other parts of the world are also experiencing bumps: the Eurozone ( all countries using the euro) experienced its inflation of around 4.1 percent, the highest in 13 years.

Covid-19, which has wreaked havoc on global supply chains, is largely to blame for this. “All in all, the key theme is a Covid disruption,” said Gregory Daco, U.S. chief economist at Oxford Economics. “That’s the main reason we’re seeing inflationary pressures around the world.”

It turns out that the global economy can stall a bit when a pandemic once around a generation rolls around. The virus distorted supply chains, pressured international travel, and closed businesses and services. Now, even though the world is recovering from these shocks, Covid-19 is still rising and rising, and combined with other disruptions – such as climate-related events – supply chains are still trying to sort themselves out.

“There are country-specific causes and problems, but if there is one overriding factor that comes into play, it is certainly what has happened in terms of the global supply chain – which is a factor in the continuing impact of the pandemic,” he said. Matthew Sherwood, global. economist at the Economist Intelligence Unit.

So Covid chaos takes the blame, but it’s not necessarily one-size-fits-all. Inflation dynamics are different depending on the country or region you are looking at. It’s almost like post-Covid economy bingo where everyone plays the same game but with different combinations on their boards. Sure, the British and Americans are worried about gas prices and turkey shortages, but price increases on both sides of the Atlantic may not necessarily be driven by the same problems at the same times.

Yet inflation is happening pretty much everywhere, said Gian Maria Milesi-Ferretti, a senior fellow at the Brookings Institution. It is felt in some places more acutely than others. This is true for developed economies such as the United States or the euro area, which have experienced large price increases for the first time in years. And Milesi-Ferretti said inflation is also happening in emerging markets, even those that already had a higher inflation pre-pandemic, like economies in Latin America. Its impact on consumers can vary depending on where the price increases occur, whether it is on raw materials (things like oil or natural gas), or durable goods (like cars) or food.

“[Inflation] is everywhere except in different sectors and at different times, as it comes from supply chain disruptions, and it depends on when demand is normalized in each country, and it depends on the pandemic, ”Şebnem Kalemli-Özcan, Professor of Finance and Economics at the University of Maryland, wrote in an email.

And because the pandemic has been anything but reliable, the question of when this volatility will cease is difficult to answer. Some economists and experts believe that these supply chain disruptions will last into 2022, perhaps even 2023, which could keep inflation up. And more than the actual price increases, experts said, the biggest concern is inflation expectations – basically, if consumers and businesses think inflation is here to stay, they can adjust their behavior accordingly, making it more likely, that inflation can persist for a long time – long term, wherever it happens.

A look at inflation around the world

The (unnecessary) run on toilet paper at the beginning of the pandemic was probably a warning of all the financial weirdness that was to come.

Covid-19 led to a shutdown of supply – for example, production and production stopped due to Covid-19 restrictions. At the same time, the pandemic completely reversed demand. Suddenly no one bought plane tickets or booked cruises, but people wanted a new desk or lawn furniture or timber to renovate their homes. “You have this combination of supply disruptions along with very unusual, very high demand,” Milesi-Ferretti said.

At the same time, the dramatic breaks the economies experienced at the beginning of Covid-19 have not been as long-lasting as first feared. The economies are improving and they have done so with a healthy cut, especially in places like the US and Europe. But as economies rise again, they do so at a pace where supply and shipping and transportation can not quite keep up.

And for every time Covid-19 has retired, it has also seemed to come back annoyingly; there was the boom of vaccines and the bust of the delta variant. All this volatility and uncertainty continues to hit the supply chains.

“Because we’ve desynchronized global recoveries, because we have pockets of new waves of Covid hitting different places around the world at different times, supplies are not coming back online in a consistent way,” said Daco, of Oxford Economics. “And so you see these pockets of price pressure flowing through to the various places around the world.”

This is a global problem, and as experts said, depending on how strong demand is in certain places, or how strong or weak the supply is, individual economies have slightly different variants of inflation.

Tag USA. Experts said that this pressure largely exists because the existing supply chains can not keep up with demand. The U.S. economy is actually in pretty good shape, though the public does not necessarily agree. All the checks that went out as part of the U.S. stimulus packages gave people money to spend. It has accelerated the U.S. recovery, but from materials to manufacturers to shipping ports, the supply chain likes to keep up with U.S. consumers looking to buy new computers or cars.

In Europe and elsewhere, it is a slightly different picture. Also in these places the price of goods is rising. The UK, for example, saw its CPI rise to 4.2 per cent in October compared to last year, the highest rate in 10 years. Germany saw its October CPI rise to around 4.5 per cent over a 12-month period, the highest since August 1993. Experts said demand is part of it, but Europe is also facing a lot of supply problems. They have to do with bottlenecks in the supply chain, but also with high costs for things like energy and fuel, which can pass on to consumers. In the UK, for example. rising energy costs driving the rise in prices. In Germany, rising energy prices – which are unlikely to change in the near future – are also pushing prices higher.

In Asia, experts told me, energy and raw material costs are rising as well, in part due to demand elsewhere in the world. It puts pressure on producers, but so far consumers have been somewhat isolated from that pressure. China saw a 1.5 percent increase in its CPI compared to last year, driven in part by the country’s recent power shortage. But consumers in places like Japan are not dealing with big price increases, at least not yet.

Other countries are feeling the pressure, and some emerging economies may find it even harder. Food and fuel prices are driving inflation in South Africa. Brazil is experiencing double-digit inflation – in September, more than 10 percent compared to last year.

The United Nations Food and Agriculture Organization has also said that global food prices are now at their highest level in more than a decade. According to the International Monetary Fund (IMF), consumer prices could rise around 4.8 percent globally in the next year. The UN has estimated that high shipping costs could push up prices by 1.5 percent, but with developing economies feeling the bulk of these price increases. According to the same UN report, prices could rise by 2.2 per cent for the world’s 46 least developed economies and around 7.5 per cent for island nations like Jamaica, which tend to be rather import-dependent.

A bit like Covid-19, the world is in this together. But just like Covid-19, the real cost of inflation will be felt a little differently, both among and within countries.

The good and bad news about global inflation

So the next big question is, how long will it all last? It’s probably best not to make predictions when it comes to something involving the pandemic. But an answer to when this will end is straightforward: probably when supply chain disruptions finally resolve themselves.

It sounds simple enough, which of course means it is not.

“It is temporary, but it takes longer, as in each sector there is an imbalance in demand and supply at different times,” Kalemli-Özcan wrote.

Basically, everything is out of sync, and demand in one part of the world can affect supply in another, and vice versa. Add Covid-19 to it, which, even with vaccines, is not completely on the decline. But it’s getting there, and Milesi-Ferretti said the unusually high demand for goods – “holding fingers” – is also likely to recede as people begin to feel more secure in returning to hotels or restaurants. Yet all of this can make it difficult to pinpoint how “temporary” inflation can be in different parts of the world.

But most countries and consumers share one major fear when it comes to inflation: the fear of inflation. Specifically, inflation will last and become a more permanent thing. “The risk is that inflation will become self-fulfilling,” Guy Miller, CEO and chief marketing strategist of Zurich Insurance Company in Switzerland, recently told the World Economic Forum. “The longer it stays elevated, the greater the risk that companies will be encouraged to raise prices further and workers seek higher wages.”

This is the so-called “inflation expectation”, and that is partly why inflation is such a prominent political issue in the United States and abroad. Trying to control this is also difficult because some of the tools central banks use to curb inflation – such as raising interest rates – can also slow economic growth, which can bring or weaken the actual economic recovery from the pandemic.

“Long story short, the longer inflation lingers, the more central banks have to do, and the more it slows down growth and can begin to lead to turmoil in financial markets,” Sherwood said. And it could seep into emerging markets and less developed economies, causing even more disruption as the world tries to recover from the pandemic.

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