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These Countries Have The Lowest Inflation In The World

  • The Federal Reserve has hinted that more rate hikes may be needed to bring inflation rates down to comfortable levels.
  • Many countries in Asia have been able to avoid disastrous levels of inflation at the cost of growth.
  • Covid lockdowns weighed on consumer spending and slowed economic growth, leading to lower inflation levels. 

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, as Visual Capitalist's Dorothy Neufeld and Sam Parker detail belowsome 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 infographic below maps inflation rates globally using data from Trading Economics, focusing in on the countries with the lowest inflation levels.

Inflation Rates Around The World

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, as China has reopened, some signs of inflation are beginning to appear. Food prices are up 4.8% annually in December, and hotel rates are rising.

Rank

Country / Region

Inflation Rate, Year-Over-Year

Date

1

South Sudan

-11.6%

Dec 2022

2

Macau

0.8%

Nov 2022

3

China

1.8%

Dec 2022

4

Hong Kong SAR

1.8%

Nov 2022

5

Oman

2.1%

Nov 2022

6

Panama

2.1%

Dec 2022

7

Seychelles

2.5%

Dec 2022

8

Vanuatu

2.7%

Mar 2022

9

Taiwan

2.7%

Dec 2022

10

Switzerland

2.8%

Dec 2022

11

Liechtenstein

2.8%

Dec 2022

12

Benin

2.8%

Dec 2022

13

Maldives

2.8%

Nov 2022

14

Niger

3.1%

Dec 2022

15

Brunei

3.1%

Nov 2022

16

Bolivia

3.2%

Nov 2022

17

Kuwait

3.2%

Nov 2022

18

Saudi Arabia

3.3%

Dec 2022

19

Cambodia

3.6%

Oct 2022

20

Fiji

3.6%

Dec 2022

21

Ecuador

3.7%

Dec 2022

22

Japan

3.8%

Nov 2022

23

Libya

3.8%

Nov 2022

24

Bermuda

3.8%

Oct 2022

25

Bahrain

3.9%

Nov 2022

26

Malaysia

4.0%

Nov 2022

27

Palestine

4.1%

Dec 2022

28

 

4.2%

Nov 2022

29

Jordan

4.4%

Dec 2022

30

Tajikistan

4.5%

Nov 2022

31

Vietnam

4.6%

Dec 2022

32

Bhutan

4.6%

Nov 2022

33

Tanzania

4.8%

Dec 2022

34

New Caledonia

4.9%

Dec 2022

35

South Korea

5.0%

Dec 2022

36

Israel

5.3%

Dec 2022

37

Luxembourg

5.4%

Dec 2022

38

Swaziland

5.5%

Oct 2022

39

Indonesia

5.5%

Dec 2022

40

Gabon

5.7%

Oct 2022

41

Ivory Coast

5.7%

Nov 2022

42

Spain

5.7%

Dec 2022

43

India

5.7%

Dec 2022

44

Brazil

5.8%

Dec 2022

45

Thailand

5.9%

Dec 2022

46

France

5.9%

Dec 2022

47

Norway

5.9%

Dec 2022

48

Qatar

5.9%

Dec 2022

49

Djibouti

6.1%

Sep 2022

50

Somalia

6.1%

Dec 2022

51

Trinidad and Tobago

6.2%

Sep 2022

52

Papua New Guinea

6.3%

Sep 2022

53

Puerto Rico

6.3%

Nov 2022

54

Canada

6.3%

Dec 2022

55

Bahamas

6.5%

Sep/22

56

Belize

6.5%

Nov 2022

57

U.S.

6.5%

Dec 2022

58

Aruba

6.6%

Nov 2022

59

Singapore

6.7%

Nov 2022

60

East Timor

6.7%

Nov 2022

61

UAE

6.8%

Jun 2022

62

Namibia

6.9%

Dec 2022

63

Guyana

6.9%

Nov 2022

64

New Zealand

7.2%

Sep 2022

65

South Africa

7.2%

Dec 2022

66

Greece

7.2%

Dec 2022

67

Liberia

7.2%

Sep 2022

68

Australia

7.3%

Sep 2022

69

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Malta

7.3%

Dec 2022

70

El Salvador

7.3%

Dec 2022

71

Albania

7.4%

Dec 2022

72

Cape Verde

7.6%

Dec 2022

73

Cameroon

7.7%

Sep 2022

74

Central African Republic

7.7%

Nov 2022

75

Togo

7.7%

Dec 2022

76

Mexico

7.8%

Dec 2022

77

Dominican Republic

7.8%

Dec 2022

78

Costa Rica

7.9%

Dec 2022

79

Cyprus

7.9%

Dec 2022

80

Mali

8.0%

Nov 2022

81

Nepal

8.1%

Nov 2022

82

Philippines

8.1%

Dec 2022

83

Paraguay

8.1%

Dec 2022

84

Barbados

8.2%

Oct 2022

85

Ireland

8.2%

Dec 2022

86

Uruguay

8.3%

Dec 2022

87

Morocco

8.3%

Nov 2022

88

Armenia

8.3%

Dec 2022

89

Peru

8.5%

Dec 2022

90

Lesotho

8.5%

Oct 2022

91

Algeria

8.6%

Nov 2022

92

Germany

8.6%

Dec 2022

93

Denmark

8.7%

Dec 2022

94

Bangladesh

8.7%

Dec 2022

95

Faroe Islands

8.8%

Sep 2022

96

Finland

9.1%

Dec 2022

97

Kenya

9.1%

Dec 2022

98

Cayman Islands

9.2%

Sep 2022

99

Guatemala

9.2%

Dec 2022

100

Guinea Bissau

9.4%

Nov 2022

*Inflation rates based on latest available data.

Globally, one outlier is South Sudan. Political instability and violence have depressed growth and inflation, which stood at -11.6% in December. As it faces a severe humanitarian crisis, the country has the lowest inflation rate worldwide.

Oil-producing nation Oman has also seen low inflation, at 2.1%. One reason for this is that the Omani rial is pegged to the U.S. dollar, keeping the currency anchored. Inflation has remained moderate over the last decade in the country.

The Country With the Lowest Inflation, by Region

In Europe, Switzerland has the lowest inflation rate, at 2.8%, or roughly one-third of the Euro area’s. It is also the lowest rate in the OECD. The country’s strong currency has shielded it from inflationary pressures and high import prices.

Meanwhile, Swiss production prices have risen marginally above inflation, to 4.1% annually in mid-2022. Last year, the Swiss central bank raised interest rates for the first time since 2007 from -0.75% to -0.25% following 20 years of deflation.

Panama has the lowest rate in Latin America. The dollarization of the Panamanian balboa has helped quash price pressures. In July, the government regulated the price of 72 items to keep the cost of living from rising after three weeks of protests as inflation climbed as high as 5.2% during the course of 2022.

With the lowest inflation in Asia, Macau witnessed the tourism industry fall off a cliff given lockdown measures, and the economy saw both its GDP and inflation collapse in 2022. Its real GDP is projected to have fallen close to 30% for the year.

Future Gazing

The IMF estimates that 84% of countries around the world will have lower inflation than last year. By 2024, both headline and core inflation are projected to remain above pre-pandemic levels at 4.1%.

Opposing forces of China’s reopening and weaker global growth could offset inflationary pressures, yet this interplay—among a host of other factors—remains to be seen.

By Zerohedge.com

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