Global Consumer Price Inflation
The Consumer Price Inflation is a macroeconomic inflation indicator that the government and central bank use to target inflation. Additionally, it is employed in the national accounts as a deflator and to check the stability of prices.
Global inflationary pressures have increased since Russia invaded Ukraine in Q2 2022. Supply chain and transportation problems, elevated volatility, and rising energy, food, and commodity costs are all contributing to the acceleration of the global price rise. Although the war will also dampen some inflationary pressures due to lower private sector confidence and spending, overall global inflation is forecast to accelerate in 2022-2023.
Consumer Price Inflation in Europe in 2022
Turkey, Czech Republic, Poland, Romania, Bulgaria, Slovakia, Hungary, Netherlands, Belgium, the United Kingdom, Spain, Germany, Italy, Austria, Portugal, Greece, Ireland, Sweden, Denmark, Finland, France, Norway, and Switzerland are the major economies in Europe region. With a consumer price inflation of 55.6%, Turkey was the most inflated country in the Europe region. The average consumer price inflation for the selected countries was 6.6%.
According to IMF’s Regional Economic Outlook: Europe 2022 report, Russia's invasion of Ukraine has resulted in a humanitarian disaster. About 5 million people—primarily women and children - have fled Ukraine in the two months since the invasion, and thousands more have been hurt or killed. In advanced and emerging European countries (excluding Belarus, Russia, Turkey, and Ukraine), inflation is expected to reach 5.5% and 9.1% in 2022, up from expectations of 2.2% and 3.4% in January. In Russia and particularly in Ukraine, output losses will be far higher. Significant increases in commodity prices and supply-side disruptions caused by the war will further fuel inflation and reduce household incomes and business profits.
A lengthy conflict would raise the number of refugees trying to reach Europe, compound supply-chain bottlenecks, push inflation higher, and worsen output losses. Romania, the Slovak Republic, and Spain are expected to see higher inflation than other nations due to their higher consumption of food and energy, while countries like Hungary, Poland, and Turkey have a weaker exchange rate.
The second half of 2022 and the first part of 2023 could be severely impacted by a suspension of natural gas imports from Russia. However, Europe would only be able to reduce consumption enough to offset roughly 60–70% of Russian imports through alternative supply sources.
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