Commentary: Why inflation is sweeping the world dramatically, except Asia

Sharp price rises in the United States and United Kingdom — where the headline consumer price index is up by 6 per cent and 4 per cent, respectively — have raised fears of a disastrous mistake by central banks and a return to the chronic inflation of the 1970s.. That divergence holds lessons for economic policy, now and in the future.

This is true even though Asia imports a lot of energy and has suffered the same jump in prices for oil, gas, coal and other commodities as everywhere else in the world. If you were never locked up at home, you never felt the need to buy a treadmill, a new television and enough lumber to deck the back yard.

In Japan, for example, elderly households account for almost 40 per cent of consumption, as Bank of Japan governor Haruhiko Kuroda noted in a recent speech. Gareth Leather and Mark Williams at Capital Economics discuss some of these factors in a recent note. For example, whereas the cost of shipping a container from China to Europe has risen fivefold since COVID-19 hit, the cost of shipping it within Asia has only doubled.

Where do we think the payments for vaccines are coming from and its impact on everyday things’ prices would of course deive inflation. Nothing is free in this world.

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