World Inflation falling

 I've just updated my CPI data bank (I've been distracted by a lot going on in my life, so I haven't updated it for a few months).  

It's obvious that world inflation is continuing to fall.  It will be interesting to see how sustained this decline is.  World growth is low, but the reduction of supply chain constraints and the fall in commodity prices are also factors.  But the Covid crash and Russia's invasion of Ukraine have reduced the appetite for globalisation.  Everything else being equal, that will slow the decline in inflation.

The chart below shows the inflation rate for the big 8 countries/regions (US, UK, Euro zone, Japan, China, Russia, India, Brazil) compared with the percentage of countries  (45 countries monitored) with inflation above 6%.  The chart makes it clear that inflation cycles tend to be a global phenomenon.  When the big 8 experience inflation, it tends to be experienced by most countries.  Of course, there are some countries (Venezuela, Argentina, Turkey, for example) which have perennially high inflation.   

The chart below shows the percentage of monitored economies where inflation is below 2%.  It can be seen that this neared zero as inflation soared, but has risen steadily over the last few months.  Obviously, this indicator is inversely related to global inflation rates.

  

The chart below shows a comparison between the US's Fed Funds rate (the Fed's discount rate) and the GDP-weighted average of world discount rates, covering countries with 72% of the world's GDP.

In my judgement, world discount rates have prolly peaked, though unless the world slowdown deepens, they're prolly not going to be cut rapidly.  Central Banks will wait to see if inflation continues to decline.  However, of the bigger economies, Brazil, Chile, China, Hungary and Poland have already started cutting their rates.  Most of the rise over the last couple of months in the world discount rate has been because Turkey has pushed its discount rate up to 40%.