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Rising inflation in France and Spain fuels fears of more ECB rate increases

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Rising inflation in France and Spain fuels fears of more ECB rate increases

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https://www.ft.com/content/dc05bfee-e9ad-4ac3-89b6-744da511cfab

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News, analysis and comment from the Financial Times, the worldʼs leading global business publication

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Most common everyday things in the United States are becoming cheaper because the inflation rates in the United States are dropping. The rates that the United States is at right now havent been this low in over a year. Each month overall prices fell by about 0.1% thanks to the cheapening of petrol

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CPI: US inflation falls to lowest in more than a year

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Inflation was 6.5% in December, easing for the sixth month in a row as petrol and fruit prices fell.

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Venezuela's slow road back to a normal economic status involves raising interest rates, which puts a strain on firms. This has led to a stagnation in the job market and has been bad for humanitarian development

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Venezuela’s slow economic recovery leaves poorest behind

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A crisis-hit economy shows signs of life – but in the capital, some are still barely scraping by.

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Inflation in the US has slowed down to about 5.7% for 6 months now

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Inflation Is Slowing, Good News for American Consumers and the Fed

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Consumer Price Index inflation moderated to 6.5 percent in December, helping Fed officials to lean toward slower rate moves.

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Argentina unveils new 2000 peso bank note

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Argentina unveils new 2000 peso bank note

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the largest bill of argentina was worth $2.70, the new 2000 peso note is worth $11 in response to rapid inflation. Additionally the central back raised interest rates by 75% to deal with increased cost of living.

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Argentina unveils new 2,000-peso banknote as inflation bites

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The new 2,000-peso note comes after the country's annual inflation rate soared to 95% last year.

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Lao's annual average inflation jumps from 3.8% in 2021 to 23% in 2022! -Rachel

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Lao's annual average inflation jumps from 3.8% in 2021 to 23% in 2022! -Rachel

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News: https://english.news.cn/20230202/1ddf860d13944b3d88397b53c7567755/c.html#:~:text=The%20soaring%20price%20of%20fuel,percent%20on%20average%20in%202022.

The average inflation rate in Laos has boomed from 3.8% in 2021 to 23% in 2022. There have been numerous causes for this high inflation rate such as increasing the price of fuel, gas, and other imported goods. This inflation rate has made the lives of the Laos citizens very difficult. The cost of medical care and medicine increased by 27.6% and the price of communications and transport rose by 41.3%.

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India's annual retail inflation in January rose above the central bank's upper threshold for the first time in three months.
Food price inflation, which accounts for nearly 40% of the consumer price index (CPI) basket, rose to 5.94% in January from 4.19% in December. The prices of cereals and milk continued to increase as well.

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Feb 13 (Reuters) - India's annual retail inflation in January rose above the central bank's upper threshold for the first time in three months, on higher food prices, vindicating last week's hawkish monetary policy stance.

India's annual retail inflation rate (INCPIY=ECI) rose to 6.52% in January from 5.72% in December, government data showed on Monday.

January's retail inflation was above the Reserve Bank of India's upper targeted limit of 6% for the first time since October and much higher than the 5.9% estimate, according to a Reuters poll of 44 analysts.

"Clearly, the moderation in inflation in the previous two months was not broad based and not durable signalling we are not out of the woods yet," said Sakshi Gupta, economist at HDFC Bank.

Food price inflation, which accounts for nearly 40% of the consumer price index (CPI) basket, rose to 5.94% in January from 4.19% in December. The prices of cereals and milk continued to increase.

Prices of cereals rose more than 16% year-on-year, milk rose 8.8% and eggs rose by 8.8% from last year, even as prices of vegetables fell 11.7%.

Last week, the Reserve Bank of India (RBI) hiked its key repo rate by a quarter percentage point and surprised markets by leaving the door open to more tightening, saying core inflation remained high.

The likelihood of more rate hikes, which had diminished after two previous inflation prints of below 6%, has now increased as the latest figure confirms the RBI's fear, economists said.

"The unexpectedly large jump in headline consumer price inflation in January to 6.5% y/y is a clear challenge to our view that the hiking cycle is at an end," Shilan Shah of Capital Economics said.

STICKY CORE INFLATION

India's core inflation in January was nearly flat at 6.09% to 6.10% from last month, according to two economists.

"We expect core inflation to remain elevated in Feb-March given the ongoing pass-through of higher input costs by producers," said Aditi Nayar, chief economist at ICRA.

Household goods prices rose 6.2%, health and personal care products have registered high inflation of above 6%, Madan Sabnavis, economist at Bank of Baroda, said.

Some economists now expect inflation to remain above RBI's upper tolerance band of 2%-6% for the next two months, forcing the central bank to continue its aggressive tightening cycle, hurting economic growth that had started to take root.

India's Economic Survey forecast economic growth of 6% to 6.8% in the 2023/24 fiscal year, slowing from the 7% growth projected for the current year ending on March 31.

Additonal reporting by Rama Venkat and Nishit Navin in Bengaluru; Graphics by Riddhima Talwani; Editing by Chizu Nomiyama, Kirsten Donovan

Our Standards: The Thomson Reuters Trust Principles.

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India's retail inflation breaches RBI's tolerance level first time since October

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Feb 13 (Reuters) - India's annual retail inflation in January rose above the central bank's upper threshold for the first time in three months, on higher food prices, vindicating last week's hawkish monetary policy stance. India's annual retail inflation rate (INCPIY=ECI) rose to 6.52% in January from 5.72% in December, government data showed on Monday.

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Mexico inflation maintains uptrend, rate hikes likely to continue - Devansh

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Mexico inflation maintains uptrend, rate hikes likely to continue - Devansh

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According to a report from Mexico's national statistics agency, the country's inflation rate rose by 0.42% in early August, continuing an upward trend that has been observed for several months. The increase was largely driven by higher prices for food, transportation, and housing.

The report suggests that inflation is likely to remain a concern in Mexico for the foreseeable future, with some analysts predicting that the central bank will continue to raise interest rates in an effort to control rising prices. This could have implications for consumers and businesses, as higher interest rates can lead to tighter credit conditions and slower economic growth.

The article also notes that inflation has been a longstanding challenge for Mexico, and that the COVID-19 pandemic has only added to the difficulties faced by the country's economy. However, the government has implemented a number of policy measures to address these challenges, including fiscal stimulus measures and support for small and medium-sized enterprises.

Overall, the article highlights the ongoing concerns about inflation in Mexico and the potential impact of rising interest rates on the economy.

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Mexico inflation maintains uptrend, rate hikes likely to continue

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Mexican consumer prices rose 0.42% during the first half of August, pushing annual headline inflation to 8.62%, both slightly ahead of market expectations, data from the national INEGI statistics agency showed on Wednesday.

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Inha - Inflation in food in Africa had caused a strain on families to the resident. This inflation is type of demand pull inflation since there is a lack of supply but a lot of people demand it.

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Sri Lanka faced an increase of inflation to 70.2% in August 2022 as a result of the shortage of foreign currencies (local currency can be used to purchase the foreign currencies/money like any other products).

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Sri Lanka's annual inflation rate surged to more than 70% in August as it struggles with its worst economic crisis in over seven decades.

Official data also showed food prices rose by 84.6% compared to a year ago.

The South Asian nation of 22m people was plunged into financial and political chaos this year as it faced a shortage of foreign currencies.

The country has been unable to afford key imports - including fuel, fertiliser and medicine.

Last month, the Central Bank of Sri Lanka said it expected inflation to ease, as the country's economy slowed, after peaking at about 70%.

Official figures released last week showed that the economy had contracted by 8.4% in the three months to the end of August.

Before the pandemic, Sri Lanka was heavily reliant on tourism for foreign currencies, including the US dollar.

However, border closures aimed to slow the spread of Covid-19 kept tourists away and took a major toll on the country's economy.

That, along with years of financial mismanagement, led to Sri Lanka defaulting on its debts earlier this year.

Sri Lanka has faced political upheaval in recent months, with the country's president Gotabaya Rajapaksa fleeing abroad before resigning in July.

That came as hundreds of thousands of people took to the streets, in protests that often turned violent, over a sharp increase in food and fuel prices.

Many Sri Lankans blamed Mr Rajapaksa's administration for mishandling the crisis.

Financial help

Earlier this month, Sri Lanka reached a preliminary deal with the International Monetary Fund for a $2.9bn (£2.6bn) loan. However, the agreement hinges on the country also receiving funds from private creditors.

On Tuesday, India said it had started talks with Sri Lanka on restructuring its debt and said it would also offer long-term investments. India previously provided almost $4bn in financial aid to its smaller neighbour.

India also deferred payment on Sri Lankan imports of about $1.2bn and offered a credit line of $55m for fertiliser imports.

Sri Lankan government officials are due to meet creditors on Friday, to discuss the extent of the country's economic problems and a proposal to restructure its debts.

Analysis by Arunoday Mukharji, India business correspondent

Sri Lanka is among the 10 countries around the world with the highest food inflation.

Experts have warned that rising food prices mean that economic woes for Sri Lankans will continue for some time to come.

Food security remains a huge concern for the country, especially because fertiliser shortages - due to a lack of foreign currencies - have significantly affected agricultural production. According to some estimates food production has nearly halved.

The country's shrinking reserves of foreign exchange also means that buying large amounts of food from abroad is also not an option.

Earlier this week, the UN's World Food Programme said: "the situation could deteriorate further in the coming months without urgent assistance".

As part of its programme to help Sri Lanka, the first batch of 600 tonnes of rice worth $15m has arrived from Australia.

It is part of a larger consignment of rice, pulses and cooking oil which is due to reach the country soon.

The aim is to help around 3.4m people who are worst affected in the country of the 22m.

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Sri Lanka: Inflation rate jumps to 70.2% in August

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Sri Lanka's annual inflation rate surged to more than 70% in August as it struggles with its worst economic crisis in over seven decades. Official data also showed food prices rose by 84.6% compared to a year ago. The South Asian nation of 22m people was plunged into financial and political chaos this year as it faced a shortage of foreign currencies.

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Inflation in the European Union has decreased by 8.5%. This is relevant to our class because it represents an instance of disinflation.

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1. Simply share your questions about inflation
2. Use a new post it note for every new question
3. Feel free to add to, extend or even answer the questions from other student
4. You can also share news about inflation
5. You can also share inflation related memes

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This is an example of an inflation of the water prices in South Korea. Recently, with the increasing demand and utility of water, the price have rose dramatically giving pressures to individual's purchase. This inflation on water intrigues me, because water is our necessity. This means that no matter how the price changes in market, we, consumers, are required and will continue to purchase. This demonstrates that the quantity demanded for water is inelastic since it is not responsive to the change in price.

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South Korea Inflation Rate - November 2022 Data - 1966-2021 Historical

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Consumer prices in South Korea increased 5% year-on-year in November 2022, rising at the slowest pace since April and coming in slightly below expectations of 5.1% as global energy prices trended lower and the economy slowed.

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From the video, I have learned that our 3rd theory on reason for inflation was the massive markups. And the producers such as the CEO of Hotress Brands, Executive of Tyson foods, and CEO of Visa all agreed that inflation has been a positive thing for their gains. Is this agreeable to all producers? Would all the business owners and producers benefit from inflation?

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This article is published by the International Monetary Fund (IMF), which is considered to be a credible source. One thing that this article intrigued me the most was the fact that "if the money supply grows too big relative to the size of an economy, the unit value of the currency diminish" as well as how the calculations of inflation rate involve index such as GDP deflator.

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Download PDF

BACK TO BASICS COMPILATION

Inflation measures how much more expensive a set of goods and services has become over a certain period, usually a year

It may be one of the most familiar words in economics. Inflation has plunged countries into long periods of instability. Central bankers often aspire to be known as "inflation hawks." Politicians have won elections with promises to combat inflation, only to lose power after failing to do so. Inflation was even declared Public Enemy No. 1 in the United States-by President Gerald Ford in 1974. What, then, is inflation, and why is it so important?

Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country. But it can also be more narrowly calculated-for certain goods, such as food, or for services, such as a haircut, for example. Whatever the context, inflation represents how much more expensive the relevant set of goods and/or services has become over a certain period, most commonly a year.

Measuring inflation

Consumers' cost of living depends on the prices of many goods and services and the share of each in the household budget. To measure the average consumer's cost of living, government agencies conduct household surveys to identify a basket of commonly purchased items and track over time the cost of purchasing this basket. (Housing expenses, including rent and mortgages, constitute the largest component of the consumer basket in the United States.) The cost of this basket at a given time expressed relative to a base year is the consumer price index (CPI), and the percentage change in the CPI over a certain period is consumer price inflation, the most widely used measure of inflation. (For example, if the base year CPI is 100 and the current CPI is 110, inflation is 10 percent over the period.)

Core consumer inflation focuses on the underlying and persistent trends in inflation by excluding prices set by the government and the more volatile prices of products, such as food and energy, most affected by seasonal factors or temporary supply conditions. Core inflation is also watched closely by policymakers. Calculation of an overall inflation rate-for a country, say, and not just for consumers-requires an index with broader coverage, such as the GDP deflator.

The CPI basket is mostly kept constant over time for consistency, but is tweaked occasionally to reflect changing consumption patterns-for example, to include new hi-tech goods and to replace items no longer widely purchased. Because it shows how, on average, prices change over time for everything produced in an economy, the contents of the GDP deflator vary each year and are more current than the mostly fixed CPI basket. On the other hand, the deflator includes nonconsumer items (such as military spending) and is therefore not a good measure of the cost of living.

The good and the bad

To the extent that households' nominal income, which they receive in current money, does not increase as much as prices, they are worse off, because they can afford to purchase less. In other words, their purchasing power or real -inflation-adjusted-income falls. Real income is a proxy for the standard of living. When real incomes are rising, so is the standard of living, and vice versa.

In reality, prices change at different paces. Some, such as the prices of traded commodities, change every day; others, such as wages established by contracts, take longer to adjust (or are "sticky," in economic parlance). In an inflationary environment, unevenly rising prices inevitably reduce the purchasing power of some consumers, and this erosion of real income is the single biggest cost of inflation.

Inflation can also distort purchasing power over time for recipients and payers of fixed interest rates. Take pensioners who receive a fixed 5 percent yearly increase to their pension. If inflation is higher than 5 percent, a pensioner's purchasing power falls. On the other hand, a borrower who pays a fixed-rate mortgage of 5 percent would benefit from 5 percent inflation, because the real interest rate (the nominal rate minus the inflation rate) would be zero; servicing this debt would be even easier if inflation were higher, as long as the borrower's income keeps up with inflation. The lender's real income, of course, suffers. To the extent that inflation is not factored into nominal interest rates, some gain and some lose purchasing power.

Indeed, many countries have grappled with high inflation-and in some cases hyperinflation, 1,000 percent or more a year. In 2008, Zimbabwe experienced one of the worst cases of hyperinflation ever, with estimated annual inflation at one point of 500 billion percent. Such high levels of inflation have been disastrous, and countries have had to take difficult and painful policy measures to bring inflation back to reasonable levels, sometimes by giving up their national currency, as Zimbabwe has.

Although high inflation hurts an economy, deflation, or falling prices, is not desirable either. When prices are falling, consumers delay making purchases if they can, anticipating lower prices in the future. For the economy this means less economic activity, less income generated by producers, and lower economic growth. Japan is one country with a long period of nearly no economic growth, largely because of deflation. Preventing deflation during the global financial crisis that began in 2007 was one of the reasons the US Federal Reserve and other central banks around the world kept interest rates low for a prolonged period and have instituted other monetary policies to ensure financial systems have plenty of liquidity.

Most economists now believe that low, stable, and-most important-predictable inflation is good for an economy. If inflation is low and predictable, it is easier to capture it in price-adjustment contracts and interest rates, reducing its distortionary impact. Moreover, knowing that prices will be slightly higher in the future gives consumers an incentive to make purchases sooner, which boosts economic activity. Many central bankers have made their primary policy objective maintaining low and stable inflation, a policy called inflation targeting.

What creates inflation?

Long-lasting episodes of high inflation are often the result of lax monetary policy. If the money supply grows too big relative to the size of an economy, the unit value of the currency diminishes; in other words, its purchasing power falls and prices rise. This relationship between the money supply and the size of the economy is called the quantity theory of money and is one of the oldest hypotheses in economics.

Pressures on the supply or demand side of the economy can also be inflationary. Supply shocks that disrupt production, such as natural disasters, or raise production costs, such as high oil prices, can reduce overall supply and lead to "cost-push" inflation, in which the impetus for price increases comes from a disruption to supply. The food and fuel inflation of 2008 was such a case for the global economy-sharply rising food and fuel prices were transmitted from country to country by trade. Conversely, demand shocks, such as a stock market rally, or expansionary policies, such as when a central bank lowers interest rates or a government raises spending, can temporarily boost overall demand and economic growth. If, however, this increase in demand exceeds an economy's production capacity, the resulting strain on resources is reflected in "demand-pull" inflation. Policymakers must find the right balance between boosting demand and growth when needed without overstimulating the economy and causing inflation.

Expectations also play a key role in determining inflation. If people or firms anticipate higher prices, they build these expectations into wage negotiations and contractual price adjustments (such as automatic rent increases). This behavior partly determines the next period's inflation; once the contracts are exercised and wages or prices rise as agreed, expectations become self-fulfilling. And to the extent that people base their expectations on the recent past, inflation would follow similar patterns over time, resulting in inflation inertia.

How policymakers deal with inflation

The right set of disinflationary policies, those aimed at reducing inflation, depends on the causes of inflation. If the economy has overheated, central banks-if they are committed to ensuring price stability-can implement contractionary policies that rein in aggregate demand, usually by raising interest rates. Some central bankers have chosen, with varying degrees of success, to impose monetary discipline by fixing the exchange rate-tying the value of its currency to that of another currency, and thereby its monetary policy to that of another country. However, when inflation is driven by global rather than domestic developments, such policies may not help. In 2008, when inflation rose across the globe on the back of high food and fuel prices, many countries allowed the high global prices to pass through to the domestic economy. In some cases the government may directly set prices (as some did in 2008 to prevent high food and fuel prices from passing through). Such administrative price-setting measures usually result in the government's accrual of large subsidy bills to compensate producers for lost income.

Central bankers are increasingly relying on their ability to influence inflation expectations as an inflation-reduction tool. Policymakers announce their intention to keep economic activity low temporarily to bring down inflation, hoping to influence expectations and contracts' built-in inflation component. The more credibility central banks have, the greater the influence of their pronouncements on inflation expectations.

Ceyda Oner is a deputy division chief in the IMF's Finance Department.

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Inflation measures how much more expensive a set of goods and services has become over a certain period, usually a year

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Which industries or fields does inflation tends to impact the most? What measures can the government do in order to regulate the changes of inflation?

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Is deflation a thing? If so what does it do?

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If the Federal Reserve, RBI, or other governmental organizations raise interest rates and discourage businesses from making new investments and hiring (bringing down inflation), how does the economy grow, as it could lead to stagnation?