We are currently seeing the highest inflation since the 1970s

The highest inflation since the 1970s, this alarming trend is spreading to every corner of the global economy.

Obviously, inflation has, to say the least, changed the economic mood and potentially changed the trajectory of the global and national economies around the world for years to come. McKinsey experts have studied many of the policy implications of inflation. In this review, they use the most recent publicly available data to offer several graphs illustrating the rise in inflation.

Double digits

Over the past six months, inflation has far exceeded December 2021 expectations. Experts say this is the highest inflation since the 1970s. In many countries, actual figures are twice as high as forecasts. European countries are particularly affected. For example, inflation in Lithuania is 15.5% per year, which is almost five times higher than expected. In Poland the figure is 11 per cent and in the United Kingdom it is 9 per cent, well above forecasts. At 3 percent, Switzerland is an exception. In Asia, the changes are less dramatic, with inflation in India at around 7 percent, only slightly higher than forecasts for South Korea at 5 percent. In China and Japan, inflation remains subdued.

The stakes are rising

In response to the alarming rise in inflation, central banks around the world are raising lending rates. So far, however, rate hikes in most countries have not kept pace with inflation. The rate hike is expected to dampen demand and lower prices for two of the most important components of headline inflation: housing and commodities such as energy and metals.

Real estate becomes more expensive

Home prices soared even before the 2022 inflation wave as the pandemic triggered massive changes in the real estate industry. Here we show the growth from 2020 to 2021. Real estate prices have far exceeded expectations, which is a global phenomenon. In Europe, Turkish homeowners saw the largest increase, followed by homeowners in the Czech Republic and Lithuania. In the Asia-Pacific region, New Zealand and Australia have the biggest growth. In North America, the US and Canada also showed strong growth in real estate. Mexico did not. In Colombia, one of three Organization for Economic Co-operation and Development (OECD) countries in South America, growth was modest.

Source: https://www.mckinsey.com/featured-insights/inflation/how-inflation-is-flipping-the-economic-script