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Which Countries Have the Lowest Inflation?

by Dorothy Neufeld
This post is by Dorothy Neufeld from Visual Capitalist

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Which Countries Have the Lowest Inflation?

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Investors are bracing for longer inflation.

The Federal Reserve indicated that more restrictive monetary policy is in the cards amid strong employment gains. In Europe, while inflation has fallen, it is still far above the 2% target. Across the Euro area inflation is estimated to have reached 8.5% in January.

At the same time, some countries have managed to tamp down inflation. Slower growth, cheaper import costs, and foreign exchange policy are some of the factors keeping inflation subdued.

As price pressures rattle global markets, the above infographic maps inflation rates globally using data from Trading Economics, focusing in on the countries with the lowest inflation levels.

World’s Lowest Inflation Rates

Many of the lowest inflation rates around the world are located in Asia, including Macau, China, Hong Kong, and Taiwan. In this region, widespread lockdowns strained growth and consumer spending, lessening inflationary pressures. Last year, Chinese consumers saved $2.2 trillion in bank deposits during these restrictions which were lifted earlier this year.

Inflation in the region was impacted by several other factors. Earlier on in the pandemic, Asian countries including China were less impacted by rising food costs, services inflation, and supply-chain disruptions, unlike what was seen in North America and Europe.

But now (Read more...)

Consumer Price Inflation, by Type of Good or Service (2000-2022)

by Nick Routley
This post is by Nick Routley from Visual Capitalist

Chart shows CPI price inflation since 2000

Consumer Price Inflation, by Type of Good or Service (2000-2022)

The Consumer Price Index (CPI) provides a steady indication of how inflation is affecting the economy. This big picture number is useful for policymakers and professionals in the financial sector, but most people experience inflation at the cash register or checkout screen.

Since the start of the 21st century, U.S. consumers have seen a divergence of price movements across various categories. Nowhere is this better illustrated than on this chart concept thought up by AEI’s Mark J. Perry. It’s sometimes referred to as the “chart of the century” because it provides such a clear and impactful jump-off point to discuss a number of economic forces.

The punchline is that many consumer goods—particularly those that were easily outsourced—saw price drops, while key “non-tradable” categories saw massive increases. We’ll look at both situations in more detail below.

Race to the Top: Inflation in Healthcare and Education

Since the beginning of this century, two types of essential categories have been marching steadily upward in price: healthcare and education.

America has a well documented “medical inflation” issue. There are a number of reasons why costs in the healthcare sector keep rising, including rising labor costs, an aging population, better technology, and medical tourism. The pricing of pharmaceutical products and hospital services are also a major contributor to increases. As Barry Ritholtz has diplomatically stated, “market forces don’t work very well in this industry”.

Rising medical costs have serious consequences for the U.S. population. (Read more...)

Burning Man: Experiencing Rationing

by Continuations by Albert Wenger

Susan and I went to Burning Man this year for our first time. We had a wonderful experience together with our friends Cindy and Robin (who is an experienced Burner and acted as our guide). There are many justified criticism of Burning Man and the festival will likely to have to change substantially over the coming years (a subject for a future post).

Today I want to write about the absence of prices at Burning Man. Once you get to Black Rock City, everything is free (well, not everything, as ice was $20/bag – more on that shortly). People have written about hopes and aspirations for a gift economy before but my key takeaway was about the importance of allocation mechanisms.

Without prices at Burning Man everything is rationed. You can go have a free drink at any of the bars (remember to bring your own cup and your ID – yes, that’s strictly enforced). But the bartenders will pour you a limited amount and then send you on your way. Same goes for all other goods and services. There are defined quantities available and that’s what you get.

Now “rationing” has a negative connotation but it isn’t inherently bad. It is a different allocation mechanism that has pros and cons when compared to the price mechanism. One advantage is that rationing treats people equally independent of their financial means, which can be desirable from a social cohesion perspective (well, rationing does that at least in theory – back (Read more...)

Burning Man: Experiencing Rationing

by Continuations by Albert Wenger

Susan and I went to Burning Man this year for our first time. We had a wonderful experience together with our friends Cindy and Robin (who is an experienced Burner and acted as our guide). There are many justified criticism of Burning Man and the festival will likely to have to change substantially over the coming years (a subject for a future post).

Today I want to write about the absence of prices at Burning Man. Once you get to Black Rock City, everything is free (well, not everything, as ice was $20/bag – more on that shortly). People have written about hopes and aspirations for a gift economy before but my key takeaway was about the importance of allocation mechanisms.

Without prices at Burning Man everything is rationed. You can go have a free drink at any of the bars (remember to bring your own cup and your ID – yes, that’s strictly enforced). But the bartenders will pour you a limited amount and then send you on your way. Same goes for all other goods and services. There are defined quantities available and that’s what you get.

Now “rationing” has a negative connotation but it isn’t inherently bad. It is a different allocation mechanism that has pros and cons when compared to the price mechanism. One advantage is that rationing treats people equally independent of their financial means, which can be desirable from a social cohesion perspective (well, rationing does that at least in theory – back (Read more...)

3 Insights From the FED’s Latest Economic Snapshot

by Marcus Lu
This post is by Marcus Lu from Visual Capitalist

FED economic snapshot June 2022

3 Insights From the Latest U.S. Economic Data

Each month, the Federal Reserve Bank of New York publishes monthly economic snapshots.

To make this report accessible to a wider audience, we’ve identified the three most important takeaways from the report and compiled them into one infographic.

1. Growth figures in Q2 will make or break a recession

Generally speaking, a recession begins when an economy exhibits two consecutive quarters of negative GDP growth. Because U.S. GDP shrank by -1.5% in Q1 2022 (January to March), a lot rests on the Q2 figure (April to June) which should be released on July 28th.

Referencing strong business activity and continued growth in consumer spending, economists predict that U.S. GDP will grow by +2.1% in Q2. This would mark a decisive reversal from Q1, and put an end to recessionary fears for the time being.

Unfortunately, inflation is the top financial concern for Americans, and this is dampening consumer confidence. Shown below, the consumer confidence index reflects the public’s short-term outlook for income, business, and labor conditions.

consumer price index 2005 to 2022

Falling consumer confidence suggests that more people will delay big purchases such as cars, major appliances, and vacations.

2. The COVID-era housing boom could be over

Housing markets have been riding high since the beginning of the COVID-19 pandemic, but this run is likely coming to an end. Here’s a summary of what’s happened since 2020:

  • Lockdowns in early 2020 created lots of pent-up demand for homes
  • Greater household savings and record-low mortgage rates pushed (Read more...)