Until a few years ago, major economies were struggling to achieve even mild inflation, with policymakers in the United States, the United Kingdom and the eurozone struggling to meet their targets of 2% annual price growth.
But with the arrival and persistence of COVID-19, the world changed dramatically. Two years later, everyone is worried about soaring inflation and how it can be contained.
The rates of consumer price inflation have varied across countries, reflecting their economic conditions and people’s expectations of future inflation. At the end of 2021, the U.S. annual inflation rate was 4.7%, compared to 4.8% in the U.K. and 5% in the eurozone. A common feature is that inflation rates appear to be accelerating. Hence, after experiencing negative rates of inflation for much of the year, Japan’s month-to-month inflation rate in December 2021 had risen to 0.8%.