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Definition

An average inflation rate for the world economy - which is an aggregate of all the economies of the world. World inflation is found by calculating a weighted average of the available inflation rates of most of the countries in the world. It is weighted for the relative size of those economies. Thus the US economy which is at least twice as large as any other economy has the most impact. In 2021 the global average inflation rate was 4,35% - up from 3,18% with inflation rising in most first world countries and especially America. We believe that inflation is picking up because of the very accommodative monetary policies (such as zero percent interest rates and quantitative easing) adopted by central banks to counter the effects of the 2008 sub prime crisis and then COVID-19. By February 2022, inflation in the US (the consumer price index) had risen to 7,9% its highest level in 40 years. Obviously, central banks will respond to rising inflation by raising interest rates - which is ultimately bad for the profits of listed companies.

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