May inflation report: real-time updates

The Russian invasion of Ukraine caused inflation to stubbornly take root in countries around the world.

Prices rose last year in the wake of supply chain clogsclosures linked to Covid-19 and increased energy costs, problems that should have vanished in 2022.

Six months ago, the Organization for Economic Co-operation and Development estimated that almost none of its 38 members would see inflation rates rise above 6%. The main exceptions were Turkey and Argentina, which were already struggling with uncontrolled inflation mostly unrelated to the pandemic.

Since, sanctions against Russia, one of the world’s leading producers of energy and grains, has supercharged the prices of food, fuel and fertilizers. Russian bombings, blockades and kidnappings have disrupted the flow of wheat from Ukraineanother major producer, raising the specter of famine in the poorer food importing nations.

At the same time, China’s policy of blocking areas with Covid-19 outbreaks has exacerbated the problem.

This week, the OECD announced sobering updates. In seven Eastern European nations, the inflation rate is now expected to exceed double digits. The estimated rate for the Netherlands this year nearly tripled to 9.2%; Australia doubled to 5.3%. And like the United States, Great Britain and Germany saw inflation rates hit a four-decade high, well above previous forecasts.

This is likely to affect household incomes and savings as companies struggle to invest and create jobs.

Central banks in the United States, Great Britain, Australia and India have recently moved aggressively to contain the rapid rise in prices by raising interest rates. Even the European Central Bank, which had been reluctant to raise rates for fear of triggering a recession, said Thursday it would end asset purchases and raise its key interest rate by a quarter of a point at next month’s meeting, and perhaps even more in September.

But there is a limit to what political and financial leaders can do about rising inflation, especially given the various causes. In many regions, such as Europe, inflation is driven by significant spikes in food and energy prices. The rate hike will not solve the underlying supply problems, the OECD warned.

On the contrary, the organization has partly attributed inflation in the United States to “beyond the lively demand”, Which is more sensitive to a more restrictive monetary policy. Compared to Europe, the US labor market is tighter and nominal wage growth is higher.

Although inflation is causing intense pain in some places, the long-term outlook is more positive. The World Bank expects the global inflation rate of consumer prices to fall below 3 percent next year.