- In the midst of the ongoing Russia-Ukraine war, an increase in energy and food prices, and other issues, central banks are looking for ways to escape the high inflation swamp | interest rate){kind=link}
New York (The Times Groupe)- In the midst of the ongoing Russia-Ukraine war, an increase in energy and food prices, and other issues, central banks are looking for ways to escape the high inflation swamp. interest rate
Since the beginning of the war on Feb. 24, prices of commodities such as wheat, corn, and sunflower oil have increased dramatically, resulting in disruption of the global economic recovery. energy and food
According to the UN’s Food and Agriculture Organization (FAO), food prices increased 22.9% annually in May, with vegetable oil prices rising 31.1%, cereal prices rising 29.7%, dairy prices rising 16.9%, sugar prices rising 15.4%, and meat prices rising 13.6%.
In addition, energy prices continued to contribute to historically high inflation rates.
In January, Brent crude oil was around $93 a barrel, but hit $100 after the war began the following month. In May, it fluctuated between $102 and $114.
The price of natural gas on the New York Stock Exchange almost tripled in May compared to the same month last year.
Amid the frightening price developments, central banks and economic institutions have attempted to dampen inflation.
Inflation rates
The European Union’s annual inflation rate hit a historical high of 8.8% in May, up from 8.1% in April.
The rate was 8.1%, up from 7.4% in April, in the eurozone.
Among European countries, Estonia posted the highest annual inflation rate at 20.1%, followed by Lithuania at 18.5%, Latvia stood at 16.8%, Czechia with 15.2% and Bulgaria came in at 13.4%.
The lowest in the EU were in Malta and France at 5.8% apiece, and Finland at 7.1%.
Among major European economies, Germany posted its highest inflation rates since 1974 at 7.9%, while France‘s rate was its highest since September 1985.
Italy’s was its highest since November 1990.
Other European countries also posted historical high rates, such as Belgium at a 40-year-high and Portugal soaring to a 29-year-high.
The UK posted a huge inflation rate in May at 9.1%, the highest in the last 40 years.
In the US, consumer prices increased 8.6% in May on an annual basis, the highest increase since December 1981.
The annual inflation rate in Canada was 7.7%.
In Asia, China posted an annual inflation rate of 2.1% in May, while the rate was 7.04% in India and 2.5% in Japan.
Singapore’s annual core inflation rate was 3.6% in May, its highest since December 2008.
The annual inflation rate was 17.1% in Russia last month and 18% in Ukraine.
Turkey’s was 73.5% in May.
Measures
In May, the US Federal Reserve raised its benchmark interest rate by 75 basis points, the biggest increase in 28 years, to 1.5% – 1.75%.
The Bank of England raised rates for the fifth consecutive month to 1.25%, from 1%, in May.
The Bank of Canada raised its policy interest rate by 50 basis points.
Australia’s central bank raised the cash rate by 50 basis points to 85.
Norway’s central bank raised rates by 50 basis points, marking the biggest single rate hike since 2002.
But some banks decided to keep rates unchanged such as Türkiye, Japan and the European Central Bank.
Despite expectations, the European Central Bank kept interest rates constant but gave a strong signal of a rate hike in July. energy and food
Japan’s central bank decided to maintain its ultra-low interest rates, at minus 0.1% for short-term and 0% for the long-term.
The Turkish Central Bank kept its one-week repo rate unchanged at 14% in line with market expectations. Russia-Ukraine war Russia-Ukraine war
Meanwhile, Russia’s central bank cut its key interest rate by 150 basis points to 9.5%.