While most nations saw price increases spike in 2022, experiences are diverging as we head into late 2023.
The following “heat maps” break down inflation by sector over the past 12 months – with the brightest blue and red areas indicating industries where price increases cooled or accelerated most rapidly.
Japan’s hot inflation summer
Japan stands out in the world of macroeconomic policy: it’s the last nation running a negative interest rate policy, while most other economies have been tightening rates to control inflation. This outlier status is having effects on prices and the yen. Some writers have dubbed this phenomenon “Japan’s inflation revolution.”
Japan’s heatmap has a lot of red. While electricity and gas prices have cooled rapidly from last year’s spike, most other sectors are seeing inflation worsen – especially food, culture and recreation, and furniture.
Antipodean rivals: New Zealand simmers, Australia’s cool winter
From an American or European perspective, these two rugby-loving, English-speaking, wealthy commodity exporters might seem rather similar. But their inflation heatmaps look quite different.
New Zealand has run a much more aggressive monetary policy than Australia, as local commentators have noted. Even so, roughly half of its heatmap is still flashing red. Food, personal care and clothing price increases remain notable.
Meanwhile, Australia’s heatmap has turned mostly blue. Food price increases are slowing; apparel and automotive fuel are in outright deflation.
Tropical Brazil’s Chilly Inflation
Brazil has even less red than Australia. Policymakers’ experience with fighting past bouts of inflation made the central bank comfortable with being an “early hiker.”
Tightening monetary policy earlier on than most developed nations appears to have paid off. The only red square in July 2023 was for transportation.
Screaming red triple-digit inflation in Argentina
Amid some of the world’s worst price increases, Argentina’s politics are making global news again. Presidential candidate Javier Milei shocked markets and the nation’s political establishment in the recent primary election. Milei has vowed to dollarise the economy to fight inflation and shut down the nation’s central bank.
As our heat map shows, the only segment that is flashing blue is clothing and footwear – and even there, inflation might be slowing, but is still above 100 percent.