LAHORE: Battered by a steep surge in petrol, electricity and other utility tariffs, the Pakistani public feels it has been hard done in tough times by the government at the helm and fears inflationary pressures will get unbearable to cross the 20 percent mark in not-so-distant-future, but this is perhaps the case everywhere around the world as supply chain disruption during the corona times and then the Russia-Ukraine war have literally wreaked havoc in all continents. Research shows that in India, broad-based increase in prices is the biggest headwind consumers are facing today. Facing record-high inflation, Indian consumers’ spending is down by 18 percent already, according to the Hindu Business Line, a Chennai-based business broadsheet published by Kasturi & Sons, the publishers of the Hindu newspaper.
Another eminent Indian media house The Economic Times has viewed: “The other worry is a concomitant increase in interest rates. Consumer price index (CPI) inflation is expected to touch 6.3 percent average this fiscal from 5.5 percent in the last. Given this, the Reserve Bank of India (RBI) is expected to raise the policy repo rate by another 75-100 basis points (bps), taking the cumulative rate hike for the year to 115-140 bps. To be sure, both affect economic recovery. Higher prices push up the cost of living and, thereby, erode the purchasing power of consumers. Higher cost of borrowing strangles demand in interest rate-sensitive segments. However, this fiscal, inflation could hurt growth more because of two key reasons.”
The Doha-based Al-Jazeera Television states: “India’s economic growth slowed to the lowest in a year in the first three months of 2022, hit by weakening consumer demand amid soaring prices that could make the central bank’s task of taming inflation without harming growth more difficult. Gross domestic product grew 4.1 percent year-on-year in January-March, government data released on Tuesday showed, in line with a 4 percent forecast by economists in a ‘Reuters’ poll, and below 5.4 percent growth in Oct-December and growth of 8.4 percent in July-Sept. The economy’s near-term prospects have darkened due to a spike in retail inflation, which hit an eight-year high of 7.8 percent in April. The surge in energy and commodity prices caused partly by the Ukraine crisis is also squeezing economic activity.”
In Bangladesh, the central bank has raised its key interest rate by 25 basis points to 5 percent as part of its efforts to control consumer prices.
The Bangladesh News 24, an English and Bengali language news website of Bangladesh, asserts: “The central bank cited a hike in the prices of fuel oil, food and non-food commodities on the international market. Bangladesh’s inflation rose to 6.29 percent in April, the highest in 18 months. The central bank also noted that the price hike has occurred when the global economy is turning around following expansionary measures taken by countries around the world as the pandemic ebbed.”
In Turkey, inflation has soared to 73 percent, a 23-year high, as food and energy costs skyrocket.
The CNBC, an American basic cable business news channel, recently reported: “Turkey’s inflation for the month of May rose by an eye-watering 73.5 percent year on year, its highest in 23 years, as the country grapples with soaring food and energy costs and President Recep Tayyip Erdogan’s long-running unorthodox strategy on monetary policy. Food prices in the country of 84 million rose 91.6 percent year on year, the country’s statistics agency reported, bringing into sharp view the pain that regular consumers face as supply chain problems, rising energy costs and Russia’s war in Ukraine feed into global inflation. Economic analysts expect the trajectory for Turkey’s inflation will only get worse.”
In Europe, inflation in May had hit its highest annual level since the creation of the euro currency in 1999, Europe’s statistics agency reported recently, as a record run-up in energy and food prices stoked by Russia’s war in Ukraine continued to ricochet through the continent’s economy, raising the spectre of a lapse into recession.
The New York Times maintains: “Annual inflation in the 19 countries that use the euro currency jumped to a record 8.1 percent in May, from 7.4 percent in April. Prices have been rising for 10 consecutive months and show few signs of letting up, deepening a cost-of-living crisis for consumers and forcing European policymakers to pledge a variety of measures to blunt the pain. Energy costs remain the single biggest factor pushing up prices for consumers and businesses, rising in May by a record 39.2 percent from a year earlier, while processed food, alcohol and tobacco rose 7 percent.”
In the case of United States, consumer price inflation has reached 8.3 percent in April, which showed a slight moderation from previous months.
About the state of affairs in Germany, the New York Times propounds: “Germany, Europe’s biggest economy, has been among the hardest hit, with inflation rising to 8.7 percent. France (5.8 percent), Spain (8.5 percent) and Italy (7.3 percent) also saw consumer prices continue a months’ long climb, prompting lawmakers in those countries to offer caps on energy prices or rebates for low-income households to offset the cost of gas and diesel.”
About the impact on the countries closest to Russia’s borders, a noted American newspaper said: “Inflation in Estonia, for example, which previously weaned itself off Russian gas but is now subject to volatile market swings in energy prices, surged by an eye-popping annual rate of 20.1 percent, nearly double the 11 percent recorded in January. In Lithuania, annual inflation rose to 18.5 percent, and in Latvia, it reached 16.4 percent.”
In the United Kingdom, the Bank of England has warned that inflation might reach 10 percent within months, as the prices of fuel and food put pressure on household budgets.
The BBC aptly describes the developing situation: “Inflation is the increase in the price of something over time. For example, if a loaf of bread costs £1 one year and £1.09 the next year, then that’s an annual inflation rate of 9 percent. Energy bills are the biggest contributors to inflation at present, as oil and gas prices remain at elevated levels in part due to the Ukraine war. After a rise in the UK’s energy price cap last month, average gas and electricity prices jumped by 53.5 percent and 95.5 percent respectively compared with a year ago. Fuel prices are also surging, with average petrol prices hitting 161.8p per litre in April 2022 versus 125.5p a year earlier. The April price is the highest on record.”
The globally-acclaimed British media outlet noted: “The costs of raw materials, household goods, furniture and restaurants and hotels are also going up. The rate of VAT, the tax paid when buying goods and services, has gone up for some businesses. The government reduced VAT for hospitality and tourism firms during the pandemic, but on April 1, it returned to the standard 20 percent rate. Air passenger duty and vehicle excise duty rates have also increased, as have the cost of postage and water bills in England and Wales. Higher interest rates also make mortgage payments more expensive for some homeowners. The headline inflation rate is an average, and the prices in different areas rise at different rates. One food industry boss has warned that food prices could rise up to 15 percent this year.”
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