Einar H. Dyvik
Research expert covering Nordics and global data for society, economy, and politics
Economic impact of inflation worldwide - statistics & facts
Soaring inflation rates have dominated the global economy in recent years, driven by effects of the COVID-19 pandemic and the Russian invasion of Ukraine in 2022. The high inflation rates have hit national economies, corporations, and individuals across the world hard. The world’s poorest, already struggling to make ends meet, have struggled to afford enough daily meals. Others, more well-off, have had to change or drop holiday plans completely. How has the recent peak in inflation rates impacted consumers, producers, and national economies worldwide?
The Russia-Ukraine war not only affected the world’s poorest countries. Wealthier countries in Europe, America, and East Asia and the Pacific were also affected by the galloping food prices. In some countries, shelves of vegetable oil were empty as some people were hoarding in fear of a lack of sufficient supply. In the United Kingdom, many people changed the way they prepared and consumed food as a result of the high food prices.
Particularly Germany and the German economy were hit hard by the rapidly increasing gas prices. In May 2022, before Russia cut the gas supply to Germany, the latter imported five billion cubic meters of gas from the former. With some important industries heavily reliant on cheap energy, the whole German economy started struggling as the gas supply from Russia was cut, and Germany experienced an economic recession in 2023.
How Russia’s invasion of Ukraine drove global food prices
Russia and Ukraine are both major producers and exporters of wheat, barley, maize, rapeseed, and sunflower seeds. As Russia launched a full-scale invasion of Ukraine in February 2022, halting production and blocking the main Ukrainian harbors of Odesa and Kherson, Ukrainian exports of the above-mentioned goods immediately stopped. This hit some of the poorest countries in the world hardest, including Afghanistan, Sudan, and Turkmenistan.The Russia-Ukraine war not only affected the world’s poorest countries. Wealthier countries in Europe, America, and East Asia and the Pacific were also affected by the galloping food prices. In some countries, shelves of vegetable oil were empty as some people were hoarding in fear of a lack of sufficient supply. In the United Kingdom, many people changed the way they prepared and consumed food as a result of the high food prices.
Soaring energy prices and slowing economic growth
Russia had been the most important supplier of gas to Europe up until the outbreak of the war, but as the world’s largest country cut the supply in response to sanctions from Western countries, many of these faced a gas supply crisis, with prices soaring. As a result, many people were struggling to pay their gas bills, and governments had to support with help packages.Particularly Germany and the German economy were hit hard by the rapidly increasing gas prices. In May 2022, before Russia cut the gas supply to Germany, the latter imported five billion cubic meters of gas from the former. With some important industries heavily reliant on cheap energy, the whole German economy started struggling as the gas supply from Russia was cut, and Germany experienced an economic recession in 2023.
Different situation in China
While many countries have been struggling with high inflation, there are some exceptions, most notably China, the world’s second largest economy. The Asian country has seen inflation rates around zero through 2023 and 2024, even falling into deflation during some months, meaning that prices were decreasing. This comes as the country’s real estate sector, which has played a crucial part in China's rapid economic growth over the past decade, is in crisis, with real estate giant Evergrande forced to liquidate in early 2024. Moreover, the country is facing a shrinking working-age population, and some experts predict that it will face an economic downturn over the coming decades. Nevertheless, China’s economy is forecast to grow by 4.6 percent in 2024.
