Global inflation picked up this month with all but one of the 43 countries tracked by the International Monetary Fund ending its monetary easing cycle by raising interest rates, putting upward pressure on global prices for everything from cars to grain.
Inflation in advanced economies is slowly creeping up while inflation in developing countries is rising more quickly, leaving many consumers in emerging economies struggling to make ends meet.
The IMF’s latest survey of global prices, which was published Wednesday, found inflation pressures in most countries were driven by higher food and energy prices, though it noted signs of a bottoming out in global inflation in parts of Africa.
As in most advanced economies, U.S. inflation ticked up in June, rising from 2.4 percent to 2.5 percent, while unemployment is near a 49-year low and the job market is starting to look slack. But wage increases continue to lag, and analysts warn that unless wages pick up, inflation could keep on moving higher.
In Latin America, Brazil and Argentina’s economic growth began to pick up last year, but the threat of an expensive debt to be paid in 2020 looms over both countries. Brazil has still yet to recover from its massive corruption scandal and an economic downturn. Meanwhile, Argentina’s economy is languishing amid political uncertainty, and despite falling inflation, this month announced plans to reintroduce a 7.3 percent value-added tax this September.
In emerging economies, inflation across the board appears to be accelerating. The IMF found that on average, inflation in developing economies has increased by two percentage points year-over-year since the beginning of 2017. Central banks in developing economies, the IMF said, were increasingly raising interest rates. The IMF said that governments in developing economies must take steps to further revive their slowing economies.