Everyone has felt the financial pinch as costs for pretty much everything has gone up, but according to the International Monetary Fund food and energy prices are the main forces behind the global inflation surge.
According to a press release on the IMF blog, food prices in the last year rose at the same rate as years from totals added together from 2016-2020. Energy costs showed a similar price hike, which is proven both directly and indirectly through more expensive transportation costs.
"Global inflation was generally moderating when the pandemic began, and the downward trend continued into the early months of the crisis," Philip Barrett, an IMF Research Department economist, wrote in the release. "But surging prices since late 2020 have pushed inflation steadily higher, the average global cost of living has risen more in the 18 months since the start of 2021 than it did during the preceding five years combined."
July also saw increased inflation, albeit slowed. IMF noted that the latest available data showed inflation caused by food continues to increase, while energy-related inflation has let up ever so slightly. Economists believe it could mean changes in global energy prices are passed on to customers faster than those associated with food.
Inflation is expected to reach 6.6% in advanced economies and 9.5% in developing ones, IMF reported. Economists expect getting inflation under control will become a top priority for policymakers since higher prices lead to a decline in standards of living.
The IMF said that smart fiscal support should be able to help pad the impact on the most vulnerable. It also stated that policies to address impacts on energy costs and the price of food on should be the focus, but with government budgets stretched thin, those policies will likely need to coincide with higher taxes or less government spending.