ISTANBUL
Central banks around the world have been aggressively undertaking monetary tightening since the beginning of 2022, which slowed down inflation, but also raised recession fears both domestically and for the global economy.
Despite central banks’ rate hikes, high energy and food prices continue to push consumer and producer prices up in many regions, as global supply lagging behind overall demand has caused inflation to continue hovering at high levels.
The Organization for Economic Cooperation and Development (OECD) said food inflation hit its highest rate since May 1974 in October at 16.1%, while energy inflation was at 28.1% the same month.
Annual inflation in Russia was 12% in November, continuing its slowdown from previous months. The rate was at 12.6% in October and 13.7% in September.
The eurozone’s annual inflation rate dropped to 10% in November from 10.6% in October, according to Eurostat, the statistical office of the European Union.
Germany’s annual inflation rate was at 10% in November, easing from 10.4% in October.
Annual inflation in the UK was at 10.7% in November, down from 11.1% in October.
Spain’s consumer prices were up by 6.8% in November, down from 7.3% in October, while France’s annual inflation was at the same level in November as in October at 6.2%.
Portugal posted an inflation rate of 9.9% in November, down from 10.1% in October.
Sweden’s annual inflation meanwhile was at 11.5% in November, up from 10.9% in October, hitting its highest level since August 1981.
In Türkiye, the annual inflation rate was at 84.39% in November, down from 85.51% in October.
Inflation was at 10.8% in the OECD region in October, its highest level since April 1988.
Americas
Annual consumer inflation in the US came in at 7.1% in November, the smallest annual increase since December 2021, easing from 7.7% in October. The world’s biggest economy saw consumer prices soaring 9.1% in June, the largest annual increase since November 1981.
Mexico’s annual consumer inflation eased to 7.8% in November, a decline from 8.41% in October, its highest level in 22 years.
Brazil’s consumer price index was up 5.9% year-on-year in November, down from 6.47% in October.
Annual consumer inflation in Colombia rose in November at the fastest rate in almost 24 years, hitting 12.53%.
Asia
Japan, which has long insisted on an ultra-loose monetary policy by keeping interest rates at minus 0.1%, saw an annual inflation rate of 3.7% in October, the highest since January 1991.
The country this month approved a supplementary budget worth $215.9 billion to boost its economy and cushion the impact of rising inflation.
The annual inflation rate in the Philippines rose to 8% in November, a 14-year high, up from 7.7% in October.
India’s annual inflation rate was at 5.88% in November, down from 6.77% in October.
China’s annual inflation rate dropped to 1.6% in November, easing from 2.1% in October.
Interest rate decisions
Some central banks around the world have taken temperate steps while others have been aggressive since the beginning of this year to lower record inflation.
The US Federal Reserve last week delivered a 50-basis-point interest rate hike following four consecutive hikes of 75 basis points, carrying the target range for the federal funds rate to between 4.25% and 4.5% – its highest in 15 years.
The Fed’s aggressive monetary tightening has caused fears of a recession in the world’s largest economy, which next year could spill over to the global economy.
Fed Chair Jerome Powell said last week that more macroeconomic data is needed to prove inflation is falling, while Fed Governor Michelle Bowman said early this month that high inflation may require a higher peak interest rate level, signaling that more rate hikes are possible early next year.
The European Central Bank (ECB) was modest in its monetary policy earlier this year but also jumped on the bandwagon to tame record inflation. The ECB raised the policy rate for a fourth consecutive time in December by 50 basis points to a level of 2.5%.
The Bank of England, however, has been the most aggressive central bank among major economies, as it raised interest rates last week for a ninth straight time to 3.5% – its highest in 14 years.
Other central banks from Asia to the Americas have been mostly following the lead of bigger economies by implementing rate hikes to bring down inflation in their countries.
Whether domestic economies and the global economy at large will fall into a recession in 2023 will largely depend on central banks’ monetary policy moves and how inflation levels react.
