2021–2022 inflation surge

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2021 Inflation by category
  M2 % change from a year ago
  Consumer price index

The 2021–2022 inflation surge is the higher-than-average economic inflation throughout much of the world that began in early 2021. It has been attributed to the 2021 global supply chain crisis caused by the COVID-19 pandemic, as well as poor fiscal policies by many countries and unexpected demands for certain goods. As a result, many countries have seen their highest rates of inflation in decades.[1][2][3]

Background and causes[]

While there is no unanimous agreement by economists as to the exact cause of the inflation surge, there are several theories. Most attribute it to product shortages resulting from global supply-chain problems, largely caused by the COVID-19 pandemic.[4] Other causes cited include strong consumer demand; turmoil in the labor market; and the fact that 2021 prices are being compared to 2020 prices, which were depressed due to pandemic-related shutdowns.[5] Additionally, many economists cite the unprecedented level of spending from the passage of COVID-19 relief programs by the Biden Administration as a key factor for the inflation surge.[6][7]

Impact on individual countries[]

Housing prices inflation from Q4 2020 to Q4 2021
  40%
  20%
  0%
  -20%
  -40%

While most countries saw a rise in their annual inflation rate during 2021, some of the highest rates of increase have been in Brazil, Turkey, the United States, and New Zealand.[5]

In the US, the Consumer Price Index rose 6.8% between November 2020 and November 2021, spurred by price increases for gasoline, food, and housing. That was the highest US inflation rate since 1982.[8] Inflation is believed to have played a major role in the results of off-year elections. It is also believed to have played a major role in a decline in the approval rating of President Joe Biden (who took office in January 2021).[9] Many Republicans have blamed the actions of Biden and fellow Democrats for causing or fueling the surge.[10]

Canada also saw the highest inflation rate since 1991, with prices of food rising by 6.5%.[11]

In Turkey, retail prices rose 9.65% in December compared to November, for an annual rate of 34%. Some of the largest increases were for electricity, natural gas, and gasoline. The economy was further strained by a currency crisis caused by a series of rate cuts by the central bank; the Turkish lira lost 44% of its value against the dollar during 2021.[12]

In Brazil, inflation hit its highest rate since 2003—prices rose 10.74% in November 2021 compared to November 2020. Economists predicted that inflation has peaked and that in fact the economy may be headed for recession, in part due to aggressive interest rate increases by the central bank.[13]

In the Netherlands, the average 2021 inflation rate was the highest since 2003.[14] The inflation rate in November was the highest in nearly 40 years.[15] With energy prices having increased by 75%, December saw the highest inflation rate in decades.[14]

See also[]

References[]

  1. ^ Weber, Alexander (2 February 2022). "Euro-Zone Inflation Unexpectedly Hits Record, Boosting Rate Bets". Bloomberg. Retrieved 12 February 2022.
  2. ^ "India's Dec WPI inflation at 13.56% as firms fight rising costs". Reuters. 14 January 2022. Retrieved 12 February 2022.
  3. ^ Kihara, Leika (14 January 2022). "Japan's wholesale inflation at near record high on broad price gains". Reuters. Retrieved 12 February 2022.
  4. ^ Austin, Craig (November 10, 2021). "How the supply chain caused current inflation, and why it might be here to stay". PBS. Retrieved December 26, 2021.
  5. ^ a b DeSilver, Drew (November 24, 2021). "Inflation has risen around the world, but the U.S. has seen one of the biggest increases". Pew Research Center. Retrieved December 26, 2021.
  6. ^ Tolliver, Sandy (2022-02-25). "Runaway inflation discredits Democrats' fiscal and monetary policy". TheHill. Retrieved 2022-03-24.
  7. ^ Morgan, David (2021-11-01). "Explainer: Republicans blame Biden for inflation, but are they right?". Reuters. Retrieved 2022-03-24.
  8. ^ Aratani, Lauren (December 10, 2021). "US inflation rate rose to 6.8% in 2021, its highest since 1982". The Guardian. Retrieved 27 December 2021.
  9. ^ Enten, Harry (December 21, 2021). "Biden's economic ratings are worse than Carter's". CNN. Retrieved December 26, 2021.
  10. ^ Guida, Victoria (December 9, 2021). "Another eye-popping inflation reading is ahead. Next year could look very different". Politico. Retrieved 26 December 2021.
  11. ^ Evans, Pete (2022-02-16). "Canada's inflation rate rises to 5.1% — highest since 1991". Canadian Broadcasting Corporation. Retrieved 2022-02-16.
  12. ^ "Turkey hikes energy prices; Istanbul monthly inflation highest in decade". WTVB. January 1, 2022. Retrieved 1 January 2022.
  13. ^ Rosati, Andrew (December 10, 2021). "Brazil's Inflation Likely Peaked After Hitting 18-Year High". Bloomberg. Retrieved 1 January 2022.
  14. ^ a b "Torenhoge inflatie in december, cijfer over heel 2021 naar 2,7 procent" (in Dutch). NOS. January 11, 2022. Archived from the original on 2022-01-11.
  15. ^ "Strongest inflation in almost 40 years". Statistics Netherlands. December 7, 2021. Archived from the original on 2021-12-07.
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