December 14, 2021/Fitch Ratings
The global inflation shock has intensified in recent months as annual inflation rates for many of the largest economies climbed to their highest levels for years or even decades, as illustrated in Fitch Ratings’ latest ‘20/20 Vision’ chart pack.
The US stands out among the major developed economies, with a larger increase in consumer spending on durable goods, a bigger rise in core consumer goods prices and clearer evidence of rising services and wage inflation.
US consumer inflation hit 6.8% yoy in November – the highest annual increase in 39 years. The eurozone recorded its highest inflation rate since the monetary union at 4.9%, with German inflation at a 29-year high of 5.2%. Rapid growth in durable goods consumption has contributed to global goods shortages and supply-chain bottlenecks, recently compounded by higher energy prices.
Emerging markets (EMs) have also had very sharp inflation increases – Turkey, Brazil and Russia recorded 21.3%, 10.7% and 8.4% yoy growth, respectively. Inflation has, however, generally remained low in the largest Asian economies.
Against this backdrop, EM central banks have tightened monetary policy with rate hikes in Brazil, South Korea, Mexico, Poland and South Africa in the past two months. Conversely, Turkey cut its rates.
