Price pressures are now gathering momentum across economies in Asia, bringing the continent more in line with the rest of the world in facing historic inflation that’s creating a painfully high cost of living.
Japan’s producer prices climbed in March by more than expected, consistent with other recent inflation readings from countries like India and South Korea. Similar stories continued to play out in the U.S., where consumer prices rose the most since 1981, and in the U.K., where inflation was the quickest in three decades.
As a result, an increasing number of central banks around the world are taking more aggressive monetary policy stances.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:
World
Russia’s war with Ukraine will slow the world economy’s nascent rebound from the pandemic, reduce goods trade and potentially lead to a broader splintering of global commerce, according to the World Trade Organization. The Geneva-based trade body lowered its projection for growth in merchandise trade this year to 3%, down from a previous projection of 4.7%.
Central banks around the world this week stepped up their efforts to fight inflation. Policy makers in Israel delivered an interest-rate hike that exceeded most forecasts, while those in New Zealand and Canada each raised rates by the most in 22 years. Namibia, Argentina and South Korea also tightened policy.
Asia
The world is now facing a synchronized inflation outbreak as food and energy prices surge in Asia, a shift from just a few months ago when the region appeared to avoid the price fever gripping the U.S. and parts of Europe.
Japan’s producer prices climbed more than expected in March, hovering close to the fastest pace in more than four decades and maintaining pressure on companies trying to absorb higher costs.
U.S.
Consumer prices rose in March by the most since late 1981, underscoring the painfully high cost of living and reinforcing pressure on the Federal Reserve to raise interest rates even more aggressively. The consumer price index increased 8.5% from a year earlier, and the 1.2% monthly increase was the biggest gain since 2005.
The latest reports on retail sales and consumer sentiment offered a glimmer of hope that Americans aren’t ready to pull back on spending en masse in the face of decades-high inflation.
The latest U.S. crop conditions data highlight the toll that drought is taking on winter-wheat fields, and Ukraine’s grain harvests are expected to fall significantly amid Russia’s war. The Department of Agriculture’s Foreign Agricultural Service recently said that the U.S. remains the only “feasible supplier” to fill the gap left by Russia’s war in Ukraine.
Europe
U.K. inflation surged to a 30-year-high of 7% last month, intensifying a cost of living crisis that threatens to derail the economic recovery. It adds to pressure on the government and Bank of England to act, with prices set to surge further this month when a 54% increase in energy costs hit household bills.
The tightest U.K. labor market in living memory is failing to tempt people back into work, creating severe shortages for employers. The number of people declared inactive -- neither in work nor looking for a job -- rose further in the three months through February to 8.86 million, according to the Office for National Statistics. That’s the equivalent of 21.4% of the population age 16 to 64, the highest rate since 2017.
Confidence in Germany’s economic recovery slid for a second month as investors worry that price spikes driven by Russia’s war in Ukraine will dampen output. The ZEW institute’s gauge of expectations dropped to the lowest level since the Covid-19 pandemic erupted in 2020.
Emerging Markets
Sri Lanka warned of an unprecedented default and halted payments on foreign debt, an extraordinary step taken to preserve its dwindling dollar stockpile for essential food and fuel imports. All outstanding payments to bond holders, bilateral creditors and institutional lenders will be suspended until a debt restructure, the finance ministry said in a statement earlier this week.
São Bernardo, the city of under a million, has often been called Brazil’s Detroit, though the comparison is not all that flattering these days. It offers a unique view of Brazil at this moment in time, as the country wallows in a recession, battered by soaring prices and plummeting employment, with the pandemic not entirely behind it and a presidential election in October.
Bloomberg