While the downward trend in inflation worldwide is parallel to the economic policies of many countries, it is also noteworthy that the decline continues at different speeds in different regions.
Despite rising interest rates, sticky high inflation continues to push many governments and central banks around the world, especially in the service department.
The inflation rate, which has been low for many years, has generally entered an upward trend, especially in the recovery period after the Covid-19 pandemic.
In the aftermath of the pandemic, the economic recovery was influenced by financial incentives and the difficulties experienced on the supply side in the face of consumer demand contributed to the strengthening of inflation.
In addition to the price increases experienced in the process of reopening economies with breaks in supply chains, inflation has also been negatively affected by geopolitical developments.
With the start of the Russia-Ukraine war, the increase in inflation became even more obvious with the rapid rise in power supplies and food prices.
Disruptions in the supply chain, high oil and gas prices and the rapid rise in commodity and food prices created a full inflation storm on a global scale and significantly increased life costs.
Thus, inflation, which had been low for many years, quickly began to rise in almost all countries.
While inflation in many countries has become the biggest test of central banks after Covid-19, it has reached the highest level in the last 40 years in developed economies, including the United States and some European countries.
While some countries have relied heavily on monetary policy to curb inflation by raising interest rates, other countries have used a variety of methods for legal price controls, tax increases, and government spending reductions.
While the effort with inflation continues in many regions, it is noteworthy that some countries have been able to approach their inflation goals in the last period.
While inflation in the UK, USA, Australia and the Eurozone has fallen from peak levels to below purpose levels, hyperinflation, known as very high inflation, continues to be a problem in many African, Central and South American countries.
According to S&P Global Market Intelligence information, global consumer prices inflation decreased from a peak of 8.3 percent in September 2022 to 4.5 percent in June 2024.
THE EUROPEAN REGION
The year 2022 in the Eurozone was the peak period of inflation. The inflation rate recurred on record almost every month. The Eurozone inflation rate, which averaged 2.9 percent annually in the 2021 period, was 9.2 percent in 2022.
Annual inflation in the Eurozone, which peaked at 10.6 percent in October 2022, marked the highest level measured since the last 25 years in which information was collected by Eurostat.
Double-digit inflation numbers were experienced for the first time in most EU countries. The peak inflation was well above the European Central Bank's (ECB) 2% target.
The ECB, which strives to increase interest rates with high inflation, increased interest rates by 450 basis points in 10 consecutive meetings after July 2022.
While this has increased credit costs for consumers, it has slowed the economy by making investments in manufacturing, construction and other departments more valuable. But the bitter prescription to stop inflation has become unavoidable.
While the measures taken yielded results, the latest falling power prices and the annual inflation rate in the Eurozone in September fell to the lowest level in the last three years.
The Consumer Price Index (CPI) in the Eurozone, which was 2.2 percent in August, was 1.8 percent year-on-year in September.
Thus, for the first time in more than three years, inflation was below the objective of 2 percent, which the ECB sees as its ideal for the economy of the Eurozone in the medium term.
Energy prices fell by 1.6 percent in September compared to the previous month, while service prices fell by 1 percent. Despite this, the prices of non-powered industrial goods rose by 2.1 percent, while the prices of unprocessed food rose by 0.9 percent.
This confirms how decisive the decline in power prices is, but also slightly alleviates the concerns of relatively high inflation in the service sector.
On the other hand, information from the Eurozone has raised the expectation that the ECB will lower interest rates again at the mid-month monetary policy meeting.
The ECB, which aims for 2 percent inflation in the medium term, last went to the second interest rate reduction of the year on September 12 in line with market expectations, reducing the deposit interest rate by 25 basis points, the main refinancing interest rate and the marginal borrowing interest by 60 ⁇ ar basis points.
The bank reduced the deposit rate, which is very valuable for financial markets, by a quarter of a point to 3.50 percent.
While the ECB Board of Directors has previously confirmed that it will not adhere to a certain interest rate pathway, some analysts predict that the bank will continue to reduce interest rates until mid-2025.
The LAGARDE is: ECB monitors fall in inflation with optimism
ECB President Christine Lagarde, speaking this week about the policies they will implement, ⁇ Recent developments strengthen our confidence that inflation will return to its purpose in time. We will take this into account in our monetary policy meeting in October.
Pointing out that the decline in inflation has accelerated in the last two months, Lagarde said that headline inflation fell to 2.2 percent in August 2024, and that inflation is expected to decline further in September due to decreasing power costs.
Lagarde pointed out that the impact of the sharp declines in power prices on annual inflation has disappeared, so inflation may increase by a measure in the fourth quarter.
Pointing out that they are determined to ensure that inflation returns to its 2 percent goals on time in the medium term, Lagarde said that they will continue to follow a data-based approach to determine the appropriate level and duration of restrictions, focusing on the inflation outlook, the dynamics of inflation and the transmission power of monetary policy.
Lagarde ⁇ 's statements have sufficiently raised expectations in financial markets that the ECB ⁇ may reduce interest rates again.
INFLATION IN GERMANY DISCOVERED UNDER THE PURPOSE OF ECB ⁇
According to the German Federal Statistical Office (Destatis), annual inflation in Germany fell to 1.6 percent in September due to tight interest rate policy and uncertainty in economics, well below the ECB's goal.
Thus, annual inflation in Germany, the dominant economy of AB ⁇ , fell to its lowest level since January 2021 ⁇ .
EU-compliant CPI fell by 0.1 percent in September compared to the previous month and rose by 1.8 percent year-on-year. EU-compliant CPI was recorded as 2 percent annually in August.
Core inflation, which is calculated by excluding food and power in the country, decreased from 2.8 percent to 2.7 percent in September.
In this case, the prices of food products, which were the biggest determinants of inflation in the country last year, increased by 1.6 percent compared to a year ago in September, while power products decreased by 7.6 percent.
ABD ⁇ DE INFLATION IS THE LOWEST LEVEL SINCE FEBRUARY 2021
According to U.S. Department of Labor data, the Consumer Price Index (CPI) in the country increased by 0.2 percent on a monthly basis in August and 2.5 percent on a yearly basis in line with expectations.
Annual inflation in the U.S. reached its peak of 41 years with 9.1 percent in June 2022. High inflation was the biggest concern of voters in the 2022 midterm elections.
CPI, which recorded its lowest annual increase since February 2021, increased by 2.9% year-on-year in July.
The core CPI, which does not include variable power and nutrient prices, also increased by 0.3 percent monthly and 3.2 percent year-on-year in August.
ENGLAND (UK) - Mm-hmm.
Annual inflation in the UK has fallen significantly since reaching a 40-year high of 11.1 percent in October 2022.
According to data from the British Office for National Statistics (ONS), annual inflation in the country was expected to be 2.2 percent in August. Inflation was 2.2% in July.
Annual inflation, excluding energy and food prices, was 3.6 percent in August. In July, core inflation was measured at 3.3 percent year-on-year.
Service sector inflation was calculated as 5.6 percent year-on-year in August. Service inflation was 5.2 percent in July.
The decline in the inflation rate in countries does not indicate that prices are falling, but only that prices are rising at a lower rate.
AUSTRALIA AND SOUTH KOREA
Annual inflation in Australia, one of the developed countries, fell to 2.7 percent in August from 3.5 percent in July, entering the target range of the country's central bank.
This decrease reduced the inflation rate to the target range of 2-3 percent of the Reserve Bank of Australia for the first time since August 2021.
In Canada, the annual inflation rate fell more rapidly than expected in August, from 2.5 percent to 2 percent. This is the lowest inflation rate in the country since February 2021.
Inflation in South Korea reached its lowest level in three and a half years at 1.6 percent in September. This decrease compared to the 2 percent increase in August reflected the ongoing efforts to stabilize the economy in the face of fluctuations in global conditions. Inflation in South Korea was recorded as 6.3 percent in July 2022. The South Korean Ministry of Finance expects annual inflation to be 2.6 percent this year.
Annual inflation in Brazil, which has the largest economy in Latin America, decreased to 4.24 percent in August 2024 after rising to 12.13 percent in April 2022.
In India, the inflation rate, which was 7.79 percent in April 2022, decreased to 3.65 percent in August 2024 and fell to the second lowest level in the last five years.
