We all hear the headlines about Global Inflation daily, don’t we?
But what is Global Inflation, and why is it constantly hitting the headlines 24/7?
Here is precisely what you need to know about worldwide inflation and how governments fight it. Inflation is usually defined as the continued increase in available items. Since the 2008 global financial crisis, the world’s economy was still suffering greatly.
Then the major blow to the economy came from the pandemic, which resulted in deep financial crises and Russia’s invasion of Ukraine.
Global inflation badly affects world trade, reduces purchasing power, devaluates the currency, and raises the cost of living, decreasing the standard of living.
Moreover, it creates affordability issues for low-income earners and increases interest rates.
What are governments across the globe doing to fight inflation?
Governments all around the globe should join hands together with economists and policymakers to tackle the rising issue of inflation. Well, here I would like to say that kill the inflation now before it kills the people. So let us see what governments are doing to curb the rising inflation crises in their countries.
Inflation reduction act:
Let us start with the US, which has the most potential to generate significant revenue. Unfortunately, it has been hit hard by high inflation. The Biden government has approved the Inflation Reduction Act. The bill plans to invest $443 billion over ten years to overcome the headache of inflation. President Biden has an intelligent plan to tackle the problem of inflation by asking America’s large corporations and billionaires to pay their fair share.
- The policy will help reduce costs for American families.
- It will help economic recovery that will be historic.
- Minimum tax on the middle class.
- It will strengthen Medicare.
- The country will produce a surplus of food to reduce food prices.
- Most significant investment to fight climate change.
- People are encouraged to buy electric cars, which are too expensive.
- It will increase inflation in the long term process.
- It won’t genuinely decrease inflation.
- It has plunged the economy of America into a deep crisis.
Talks with IMF:
Currently, Sudan is plunged into a deep financial crisis; as a result, a shortage of essential commodities like food, fuel, and medicine can be seen. Sudan is facing these issues because of the war in Ukraine and the military coup. Sudan’s national currency has further devaluated, making matters significantly worse. Living wages are given to the employees, which is simply not helping them to increase their living standards. People, in turn, are protesting and demonstrating strikes to provide them with higher wages and necessities.
The government has taken help from IMF to stabilize the worsening situation.
- Reduction in gasoline and diesel subsidies.
- Provide social assistance through Sudan Family Support Program.
- Better exchange rate.
- Sudan is still in dept.
- More financing is needed for economic growth.
The government of Germany has announced a $65 billion package for German citizens, said German Chancellor Olaf Scholz at the unveiling of the package.
- Germany will be able to survive cold winters.
- The government considers a one-time payment of $1460 to help employees with rising prices.
- Tax relief for citizens
- The talks of a formal wage increase have been postponed.
- But tax relief is likely to benefit those earning a high income, not employees with low income.
The inflation in France has also been the highest, especially in food and energy. The government approved a $20.3 billion package for its citizens.
- People will be able to buy essential food items.
- The ease at affording energy supplies.
- Purchasing power reduced.
- Not enough wages to bring stability.
The government of Japan has decided to spend around $48.2 billion on extra gas subsidies and hand out cash to its citizens.
- Cash assistance would be given to Japanese citizens.
- Easy affordability of natural gas.
- Inflation still can’t be tackled.
- The value of the Japanese yen is falling sharply.
Economic Recovery Plan:
Inflation in Mexico reached 7.72% in the first quarter of 2022. Mexican Finance Minister Rogelio Ramirez de la O has announced that the country produces surplus staple food.
- Citizens will be able to purchase food at fair prices.
- The country will be able to increase its food production.
- Suspension on the import of 21 staple items will help the economy.
- Still a weaker currency exchange.
- Many people have affordability issues.
Portugal also takes effective measures against inflation and has approved aid of 2.4 billion euros. Moreover, they have also reduced the tax on electricity from 13% to 6%.
- People would be able to pay electricity bills quickly.
- Economic stability.
- Still, there is a structural weakness.
- Difficulty in importing products because of the rise in prices.
Because of unexpectedly high inflation, businesses are drying up in Italy. The Italian government announced a package of $17.4 billion to help its citizens.
- Will support people to flourish their businesses again
- Consumers will be able to buy things at regular prices.
- Will also support Tourism activities.
- Energy prices are still hiking.
- EU funds are insufficient to compensate for energy prices.
The Inflation in Spain is also the highest in more than four decades. The Spanish government has decided to cut the value-added tax on natural gas to 5% from 21% and is also planning to give $9.5 billion to its citizens.
- Will assist people so that they can afford necessities easily.
- Citizens will also be able to afford natural gas.
- The public debt has risen immensely.
We have already learned about the rising global inflation and how governments are taking initiatives to lower them. Inflation is a very alarming issue that has burdened people to a significantly greater extent. The inflation has risen immensely till now and is expected to grow more – at least till the end of this year.
Economists and policymakers need to be more cautious and step up their game. People should also lend their full support to the government and work together as a nation to set the country free from the shackles of inflation.
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