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Inflation worldwide - Statistics & Facts

Inflation is the phenomenon of prices increasing for all goods. Most central banks have a target of low and constant inflation, generally between 1.5 and four percent per year. However, many global regions overshoot this. High inflation can lead to lower purchasing power, as prices tend to grow before wages, and those with savings or living on a fixed income see their buying power erode. Hyperinflation, the extreme example of this phenomenon, can lead to total economic collapse as the currency loses value so quickly that it essentially becomes worthless. Negative inflation, commonly called deflation, is also a problem because companies and financers delay investments, leading to stagnant economic growth.

Inflation expectations

One of the major influences of inflation is expectations. If workers expect prices to rise, they demand higher pay, and their employers must raise prices to cover this cost. However, since the Eurozone Crisis, the largest economies in Europe have struggled against expectations of deflation. Japan has struggled with this for years, with both fiscal and monetary policy unable to keep inflation above one percent due in large part to expectations of deflation. Latest global trends in inflation has seen a rise in numbers ever since mid 2021. In the aftermath of the COVID-19 pandemic, inflation has been increasing in much of the developed world. Japan has been one of the only countries to keep their inflation low, but in countries like the United States numbers are increasing every month.

Ways of measuring inflation

Inflation in often measured by the consumer price index (CPI), often reported without food and fuel prices. This represents a measure of costs that consumers face, calculated to represent how much changing prices affects consumers. However, those more interested in business look to the producer price index (PPI) or others, which represent the costs to firms and may influence financial markets differently. Because each sector experiences inflation in a different way, many analysts also look at the CPI in their selected industries. Similarly, different people have different economic interests. Older generations, more interested in the changing price level due to their tendency to live on a fixed pension, consider inflation to be a greater concern than younger people.

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