The cost of living for consumers is influenced by the cost of living for households as well as the cost of a variety of goods and services. Government organizations undertake home surveys to determine a basket of frequently purchased commodities and track over time the cost of purchasing this basket in order to calculate the typical consumer's cost of living. The CPI is used as a macroeconomic indicator of inflation, as a tool by the central bank and government for inflation targeting. It is also used for inspecting price stability, and as deflator in the national accounts.
Following Russia's invasion of Ukraine in Q2 2022, there has been an upsurge in global inflationary pressures. Global price rise is accelerating due to issues with supply chains and transportation, increased volatility, and rising energy, food, and commodity prices. 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. Under the baseline scenario, global inflation is forecast to reach 7.9% for 2022, and towards 5.0% for 2023, compared with 2001-2019 average annual global inflation of 3.8%.
In aggregate, countries that depend more on energy will experience bigger inflationary consequences in 2022. Consumers and businesses in emerging and developed economies will increasingly feel the impact of rising prices since inflation is predicted to continue high in 2022–2023. Additionally, higher costs will put more strain on companies' profit margins.
APAC inflation baskets often include 25% to 30% of the price of food, which is a significant portion. The effect of increasing non-food inflation has been lessened as a result of major vegetable and pig prices being tightly controlled (or in outright deflation in China's case). Due to their lower basket weight and strong government mitigation measures, developing nations have seen less of an impact from rising energy prices than developed markets.
Even though rising energy prices caused by Russia's war in Ukraine drove up inflation in the euro-using nations of Europe to a new record high in July, the economy managed better-than-anticipated, growth in the second quarter. The 19 nations that make up the eurozone's annual inflation rate increased to 8.9% in July from 8.6%, according to the European Union statistics agency.
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