World Bank records show that the inflation rate has increased significantly in almost all countries throughout 2022, including developed countries. The World Bank predicts that the inflation rate in developed countries could be a little over 9 percent, the highest since 1982.
The World Bank estimates the median global headline inflation will exceed 9 percent in the second half of 2022. This figure is the highest since 1995. Inflation in developing countries is also expected to reach nearly 10 percent and is the highest level since 2008. Meanwhile, in developed countries, the rate of inflation is expected to be slightly above 9 percent, the highest since 1982.
The World Bank in its January 2023 edition of the Global Economic Prospects report Wednesday (11/1/2023), wrote, “Inflation is above target in almost all countries that have adopted inflation targeting.”
They explained that the soaring inflation rate in 2022 reflected a combination of demand and supply factors.
On the demand side, the accelerated growth during the early recovery from the global recession of 2020 has provided continued price pressures. The biggest price increases have occurred in sectors such as shipping and air travel.
Meanwhile, on the supply side, the shortage of supply of key commodities, which was exacerbated by Russia’s invasion of Ukraine, contributed greatly to the increase in energy and food prices.
In some countries, tight conditions in the labor market are also adding to rising wages and higher input and production costs.
“Lastly, many countries experienced massive currency depreciation which passed on to higher import, producer and consumer prices,” wrote the World Bank.
Accordingly, global core inflation has risen sharply, reaching over 6 percent at the end of last year, its highest level since 1992. This has resulted in short-term inflation expectations have risen in most economies.
Meanwhile from within the country, inflationary pressure in the next six months or in May 2023 is expected to decrease.
The results of the Bank Indonesia Retail Sales Survey (BI) show that the General Price Expectation Index (IEH) for May 2023 was 140.2, down from the previous month’s 140.8.
Executive Director, Head of the BI Communication Department Erwin Haryono said, this estimate is in line with respondents’ confidence in the supply of goods.
in line with expectations of reduced inflationary pressure, respondents expect retail sales to increase in May 2023.
This is indicated by the Sales Expectations Index (IEP) for May 2022 which was 153.9 or an increase from 146.9 in the previous month. The May 2023 IEP increase was also driven by smooth distribution and favorable season conditions.