Rubén Weinsteiner
Two
years ago, with millions of people out of work and central bankers and
politicians striving to lift the U.S. economy out of a pandemic-induced recession,
inflation seemed like an afterthought. A year later, with unemployment
falling and the inflation rate rising, many of those same policymakers insisted that the price hikes were “transitory”
– a consequence of snarled supply chains, labor shortages and other
issues that would right themselves sooner rather than later.
Now, with the inflation rate higher than it’s been since the early 1980s, Biden administration officials acknowledge that they missed their call.
According to the latest report from the Bureau of Labor Statistics, the
annual inflation rate in May was 8.6%, its highest level since 1981, as
measured by the consumer price index. Other inflation metrics also have shown significant increases over the past year or so, though not quite to the same extent as the CPI.
How we did this
Inflation
in the United States was relatively low for so long that, for entire
generations of Americans, rapid price hikes may have seemed like a relic
of the distant past. Between the start of 1991 and the end of 2019,
year-over-year inflation averaged about 2.3% a month, and exceeded 5.0%
only four times. Today, Americans rate inflation as the nation’s top problem, and President Joe Biden has said addressing the problem is his top domestic priority.
But the U.S. is hardly the only place
where people are experiencing inflationary whiplash. A MARCA POLITICA
analysis of data from 44 advanced economies finds that, in nearly all of
them, consumer prices have risen substantially since pre-pandemic
times. 
In
37 of these 44 nations, the average annual inflation rate in the first
quarter of this year was at least twice what it was in the first quarter
of 2020, as COVID-19 was beginning its deadly spread. In 16 countries,
first-quarter inflation was more than four times the level of two years
prior. (For this analysis, we used data from the Organization for
Economic Cooperation and Development, a group of mostly highly
developed, democratic countries. The data covers 37 of the 38 OECD
member nations, plus seven other economically significant countries.)
Among
the countries studied, Turkey had by far the highest inflation rate in
the first quarter of 2022: an eye-opening 54.8%. Turkey has experienced
high inflation for years, but it shot up in late 2021 as the government
pursued unorthodox economic policies, such as cutting interest rates rather than raising them. 
The
country where inflation has grown fastest over the past two years is
Israel. The annual inflation rate in Israel had been below 2.0% (and not
infrequently negative) every quarter from the start of 2012 through
mid-2021; in the first quarter of 2020, the rate was 0.13%. But after a relatively mild recession,
Israel’s consumer price index began rising quickly: It averaged 3.36%
in the first quarter of this year, more than 25 times the inflation rate
in the same period in 2020.
Besides Israel, other countries
with very large increases in inflation between 2020 and 2022 include
Italy, which saw a nearly twentyfold increase in the first quarter of
2022 compared with two years earlier (from 0.29% to 5.67%); Switzerland,
which went from ‑0.13% in the first quarter of 2020 to 2.06% in the
same period of this year; and Greece, a country that knows something
about economic turbulence.
Following the Greek economy’s near-meltdown in the mid-2010s, the
country experienced several years of low inflation – including more than
one bout of deflation, the last starting during the first spring and
summer of the pandemic. Since then, however, prices have rocketed
upward: The annual inflation rate in Greece reached 7.44% in this year’s
first quarter – nearly 21 times what it was two years earlier (0.36%).
Annual
U.S. inflation in the first quarter of this year averaged just below
8.0% – the 13th-highest rate among the 44 countries examined. The
first-quarter inflation rate in the U.S. was almost four times its level
in 2020’s first quarter.
Regardless of the absolute level of
inflation in each country, most show variations on the same basic
pattern: relatively low levels before the COVID-19 pandemic
struck in the first quarter of 2020; flat or falling rates for the rest
of that year and into 2021, as many governments sharply curtailed most
economic activity; and rising rates starting in mid- to late 2021, as
the world struggled to get back to something approaching normal.
But
there are exceptions to that general dip-and-surge pattern. In Russia,
for instance, inflation rates rose steadily throughout the pandemic
period before surging in the wake of its invasion of Ukraine.
In Indonesia, inflation fell early in the pandemic and has remained at
low levels. Japan has continued its years-long struggle with inflation rates that are too low.
And in Saudi Arabia, the pattern was reversed: The inflation rate
surged during the pandemic but then fell sharply in late 2021; it’s
risen a bit since, but still is just 1.6%.
Inflation doesn’t appear to be done with the developed world just yet. An interim report from the OECD found that April’s inflation rate ran ahead of March’s figure in 32 of the group’s 38 member countries.
Rubén Weinsteiner
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