Fondsinfos

06.10.2015 | 16:00

Robeco: Inflation! Highest vs Lowest

Jeroen Blokland: Every day we are confronted with 'lowflation' and the 'desire' to push up consumer prices. But, by looking at the global average, or just the major economies, disguises the fact that there is some inflation left in a couple of pockets of the world.

This is a very short blog on inflation. But that won't ruin the fun, I promise. We all know there's a shortage of inflation, globally. The lack of rising prices has forced every leading central bank (Fed, ECB, BoE, BoJ, SNB) into QE. Every day we are confronted with 'lowflation' and the 'desire' to push up consumer prices. But, by looking at the global average, or just the major economies, disguises the fact that there is some inflation left in a couple of pockets of the world. The graph below shows the highest inflation levels of countries that are ranked, by Bloomberg, on their CPI level.

It's no coincidence that the highest inflation levels are found in emerging countries, where currency values have collapsed. Russia, Brazil, and Turkey, all major emerging countries with deflated currencies and sharply rising consumer prices. In fact, all countries in the table above are emerging.

Now, I immediately admit, there are countries that have higher inflation rates. Just take a look at the table below (taken from this Forbes article), which shows three countries even higher inflation. But I think it's fair to say that these countries are (each) in a league of their own. Syria and Ukraine are at ware and Venezuela is the most recent example of a country trapped in hyperinflation, with an estimated level of inflation of 808%!

To round up this inflation blog, I also looked up the countries with the lowest levels of inflation. The results are in the table below. Interestingly, five out of the top six countries, and nine of total sample of twelve countries are European. Perhaps low inflation is a European thing? The table also shows that 'only' nine countries actually have inflation levels below zero. That fits the notion that we currently live in a world of lowflation, and not necessarily deflation.

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