During close to 30 years, we grew accustomed to a rather low inflation rate. With few exceptions, year-over-year inflation averaged close to 2.3 percent in the U.S.
And we were not alone.
Displaying low inflation rates in OECD (Organization for Economic Cooperation and Development) nations, the black line at the bottom represents inflation in the most affluent countries:
Now again, OECD countries are moving in tandem.
Global Inflation Rates
During May, the annual inflation rate in the U.S. was 8.6 percent. Not close to Turkey, in black on the map, still the U.S. rate is considered sky high:
Looking beyond our borders, we can see that elsewhere, inflation has raced upward faster than in the U.S. Israel’s inflation rate increased by a whopping 25x in just two years. In the U.S., it was a quadruple:
Our Bottom Line: Current Causes of Inflation
Many economics books would tell you that we can have demand pull, cost push, or a single cause of global inflation. Demand pull refers to too many dollars chasing too few goods while cost push focuses on land, labor, and /or capital rising in price. Meanwhile, the singular cause is one commodity going up in price and then rippling through the economy…like oil. Then, to all of this, we can add the monetarists that say it is all about the money supply and nothing else. When too many dollars circulate, prices rise.
Right now, our inflation onslaught seems to be coming from all directions.
My sources and more: Sometimes two disparate sources come together. It happened yesterday. Pew Research sent me an inflation email and the NY Times documents the rate hikes we will look at tomorrow. Add to that OurWorldinData and we have it all. (Please note that several sentences from today were in a previous econlife post.)
