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New Delhi: India’s inflation rate — the average annual change in prices of a bundle of commodities (Consumer Price Index) — has been hovering above its upper tolerance limit of 6 per cent since January 2022.
From edible oils to food items to fuel, almost all consumer goods have gotten relatively dearer. However, data shows that the price pinch felt by an average Indian is not even close to what people in more than 100 countries are facing at the moment.
According to inflation statistics collated by tradingeconomics.com — a data repository website — based on inflation data released by governments around the world, India, with its 7.04 per cent inflation rate (reported in May 2022), ranks at 108 among a total of 172 countries for which the latest inflation data was available.
The data, as on 29 June, also shows that the rate of inflation was more than 10 per cent in 63 of the 172 countries, and lower than 10 per cent in the rest, including India.
Also Read: Fewer restaurant visits & new clothes, more non-veg food — how Covid affected Indians’ spending
Inflation rate highest in Lebanon, Zimbabwe & Sudan
According to Trading Economics, in four countries, the rate of inflation was above 100 per cent. Simply put, people in these countries were on average shelling out twice as much money for the same product compared to what they paid for it last year.
At present, Lebanon faces the worst inflation rate in the world. On average, consumer prices in the small West Asian country have risen by more than 200 per cent — consumers are on average paying almost three times more for commodities than they were paying in May last year.
Lebanon’s inflation is fuelled by its ongoing financial crisis that imploded in 2019, reportedly after years of financial mishaps, piling debt and mismanagement led to multi-dimensional deterioration of the country’s currency. The country’s inflation rate has been above 200 per cent since November last year. In May this year, it was reportedly 211 per cent.
Lebanon is followed by two African countries — Zimbabwe and Sudan — which have reported inflation rates of 192 per cent each.
Zimbabwe has a long history of ultra-high inflation. In November 2008, the country’s inflation rate peaked at 79.6 billion per cent month-on-month. The country has also been known to print more money, which has failed to control the country’s price surge. In 2019, Zimbabwe brought back its old currency after a decade of dollarisation.
In June this year, the country’s year-on-year inflation rate was reported to be 192 per cent.
Sudan’s inflation problem stems from foreign currency shortage. In 2018, the country, which relies heavily on imports, faced a severe shortage of foreign currency, leading to a depreciation of the Sudanese pound. The country’s financial problems exacerbated in 2020, after which the inflation rates have not gone below 100 per cent.
Sudan is followed by Venezuela, which used to be at the top of the list some years ago. In May this year, the country reported an inflation rate of 167 per cent.
Venezuela is one of the most oil-rich nations in the world, which is also a factor behind its high inflation trajectory. According to the Organisation of Petroleum Exporting Countries (OPEC) — a grouping of 13 countries whose aim is to ensure stabilisation of oil markets for efficient, economic and regular supply of petroleum — more than 99 per cent of Venezuela’s export earnings come from oil.
In 2014, when global oil prices crashed due to a variety of reasons, so did Venezuela’s economy. In 2018, the annual inflation rate averaged more than 65,000 per cent, according to data available on the International Monetary Fund’s portal.
Venezuela is followed by Turkey, where the inflation rate reached 73.5 per cent in May. Turkey’s populist leader Recep Tayyip Erdogan’s experimentation with economics caused soaring inflation rates, smashed the lira and enraged the people of the country.
Inflation rates are above 50 per cent in two South American countries too, according to Trading Economics — Argentina and Suriname.
Meanwhile, in Sri Lanka, where the economic crisis has triggered protests across the country, the latest inflation rate was reported to be 54.6 per cent.
China, Japan among top economies with lowest inflation rates
According to the Trading Economics dataset, rate of inflation was lower than 2 per cent in five countries. But these are small countries with a collective population of around 21 million.
In May, Macau, a special administrative region in China, reported an inflation rate of 1.1 per cent, the lowest in the world followed by Hong Kong (1.2 per cent, Hong Kong is also a special administrative region of China), Maldives (1.2 per cent), Gabon (1.2 per cent) and Bolivia (1.4 per cent).
Among the powerful economies (highest GDP), China and Japan have the lowest inflation rates at 2.5 per cent and 2.1 per cent, respectively.
Playing a part in China’s low inflation rates is the fact that its bundle of commodities used to calculate CPI gives more weight to food and clothing, and that its zero Covid-19 policy has curtailed consumer demand, the South China Morning Post reported last month.
In Japan, low inflation rate is characterised by low consumer spending and a slow growth in spending on consumer durables.
The US (8.6 per cent), India and Germany (7.9 per cent), also large economies, all have reported an inflation rate of more than 7 per cent inflation in May this year.
India’s high inflation rates were driven by “global price shocks”, according to a statement by Shaktikanta Das, governor of the Reserve Bank of India (RBI).
In its latest report, the Monetary Policy Committee — which is responsible for fixing the benchmark interest rate in India — has pointed out that the domestic outlook for inflation could remain uncertain since India’s inflation is driven by external factors.
“The tense global geopolitical situation and the consequent elevated commodity prices impart considerable uncertainty to the domestic inflation outlook,” read the monetary policy statement for 2022-23, issued on 8 June.
(Edited by Gitanjali Das)
Also Read: Why is your tadka getting more & more expensive? Blame India’s reliance on edible oil imports
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