Annual inflation rate in the euro area accelerated for the sixth straight month to a record high of 5% in December 2021 from 4.9% in November, preliminary estimates showed. Energy is expected to have the highest annual rate. Japan's consumer prices rose 0.6% year-on-year in November 2021. The upward pressure came mainly from annual increase in fuel, light, and water charges, confirming signs that soaring energy and raw material prices are pushing more broadly through the Japanese economy and are being felt by consumers. In December 2021, the Bank of England hiked interest rates for the first time since the onset of the pandemic, increasing its main interest rate to 0.25% from its historic low of 0.1% as inflation pressures mount. UK consumer price index in December 2021 was 5.4%
India’s retail inflation rises to 5.59% in December 2021, hits 5-month high. If the CPI inflation remains within the target of 2-6%, RBI will prefer to prioritise growth, and maintain policy support to impart sustainability to the recovery and help it to broaden. China’s consumer price inflation eased in December 2021 as year-over-year price increases softened to 1.5% from 2.3% in November. South Africa inflation at 5.5% in November 2021.
The South Africa Reserve Bank in November 2021 hiked its main repo rate by 25 basis points to 3.75% from its record low amid growing concerns about upside inflation risks. Brazil's inflation rises past 10% to six-year high in 2021. The surge in inflation pushed Brazil's central bank into one of the most aggressive rate hike cycles in the world last year, raising its benchmark interest rate to 9.25% in December 2021 from 2% in March 2021. Russia's consumer price inflation came in at 8.39%year-on-year in December 2021. Inflation has risen sharply in 2021 and is now running at a level that is more than twice the central bank's target of 4%, on the back of a rapid economic recovery from the initial phase of the coronavirus, reports of labour shortages across many industries and the ongoing supply issues. Except China, most of the emerging economies witnessed spike in inflation in 2021.
Qatar Consumer price inflation surged by 6.47% in December, 2021. The increase was mainly from “Recreation and Culture”, “Transport" and Food and Beverages”. Annual inflation in the United Arab Emirates increased to 2.58% in November of 2021. It was the fourth consecutive month of rising inflation, pushed up by prices of transport, food & beverages, restaurants & hotels. The annual inflation rate in Saudi Arabia inched up to 1.2% in December of 2021. It was mainly due to transport prices, food and beverages cost and furniture.
The inflation rate of consumer prices in the Sultanate of Oman increased by 3.56% during November, 2021. The inflation rate in Kuwait slowed down to 3.8% in October of 2021, from a more than 5-year high of 4.1% hit in September, 2021. Inflation rate in Bahrain remained unchanged at 0.70% in November 2021 from 0.70% in October of 2021. In the Global space, most of the countries have witnessed spike in inflation. In GCC, some of the countries have witnessed surge in inflation. In some countries, monetary actions have been taken and in some, monetary action underway. Federal Reserve policymakers have signalled they will start raising US interest rates in March, 2022 to battle inflation.
* Dr R Seetharaman is Group CEO of Doha Bank.