Post by ehsanulh125 on Jan 9, 2024 8:06:13 GMT 1
Five years agofew would have thought, that the world's central banks will soon continue a desperate struggle with inflation, which has broken decades of records. No wonder, since no one could have foreseen the coronavirus then, and the Russian-Ukrainian war - in its form and with all its economic/inflationary consequences - could not be contained. However, it could easily be that only a few people remember that not so long ago we experienced a similar wave of global inflation, namely in 2007-2008. If we look back over the past half century, we can identify even more episodes of global inflation.
The figure below shows Country Email List the 10th, 30th, 50th, 70th and 90th percentiles of year/year inflation for each month from the monthly data of the World Bank's global inflation database, which includes 188 countries: Percentiles of national inflation rates Source: World Bank, own calculation The median - that is, the middle value at which the inflation rates are just half as high in a given period - testifies to the fact that, in addition to the already mentioned 2007-2008 period, global inflation of a magnitude similar to the current one was in the mid-1990s, when many In the former socialist countries, the Soviet and Yugoslav successor states, prices were released, as well as in the 1970s, with several peaks at that time.
At first glance, however, the current situation is most similar to 2007-2008. On the one hand, in both periods, inflation started to rise sharply from a state close to price stability. On the other hand, the entire distribution moved similarly in both periods, that is, not only the median, but also the other percentiles. This suggests that countries with low inflation were not spared these shocks either. However, the similarity pretty much ends there. In 2008, the problem was quickly "solved": the financial crisis and the global recession put a stop to the release of prices, and a decade of extremely low inflation followed in most countries. The figure below shows the deviation of the median inflation in both episodes from the average of the previous two years, on a monthly basis.
The figure below shows Country Email List the 10th, 30th, 50th, 70th and 90th percentiles of year/year inflation for each month from the monthly data of the World Bank's global inflation database, which includes 188 countries: Percentiles of national inflation rates Source: World Bank, own calculation The median - that is, the middle value at which the inflation rates are just half as high in a given period - testifies to the fact that, in addition to the already mentioned 2007-2008 period, global inflation of a magnitude similar to the current one was in the mid-1990s, when many In the former socialist countries, the Soviet and Yugoslav successor states, prices were released, as well as in the 1970s, with several peaks at that time.
At first glance, however, the current situation is most similar to 2007-2008. On the one hand, in both periods, inflation started to rise sharply from a state close to price stability. On the other hand, the entire distribution moved similarly in both periods, that is, not only the median, but also the other percentiles. This suggests that countries with low inflation were not spared these shocks either. However, the similarity pretty much ends there. In 2008, the problem was quickly "solved": the financial crisis and the global recession put a stop to the release of prices, and a decade of extremely low inflation followed in most countries. The figure below shows the deviation of the median inflation in both episodes from the average of the previous two years, on a monthly basis.