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Aug. 6, 2022, 4:24 p.m. EDT

Inflation is spiking around the globe, not just in the United States

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By Christopher Decker

The  9.1% increase in U.S. consumer prices  in the 12 months ending in June 2022, the highest in four decades, has prompted  many   sobering   headlines .

Meanwhile, annual inflation in Germany and the U.K.—countries with comparable economies—ran nearly as high: 7.5% and 8.2%, respectively, for the 12 months ending in June 2022. In Spain,  inflation has hit 10% .

It might seem like U.S. policies brought on this predicament, but  economists like me  doubt it because  inflation  is  spiking everywhere , with few exceptions.  Rates averaged 9.65%  in the 38 largely wealthy countries that belong to the Organization for Economic Cooperation and Development through May 2022.

What revved up those  price increases starting in early 2021 ?

Scarcity put pressure on prices everywhere

When the COVID-19 pandemic began, demand for computers and other high-tech goods soared as many people switched from  working in offices to clocking in at home .

Computer-chip manufacturers struggled to keep up, leading to chip shortages and  higher prices for a dizzying array of devices  and machines requiring them, including refrigerators, cars and smartphones.

It’s not just chips. Many of the goods Americans consume, such as cars, televisions and prescription drugs, are  imported from all corners of the world .

Supply-chain strains

On top of problems tied to supply and demand changes, there have been major disruptions to how goods move to manufacturers and then onto consumers along what’s known as the  supply chain .

Freight disruption, whether by ship, train or truck, has interfered with the delivery of all sorts of goods since 2020. That’s caused the  cost of shipping goods to rise sharply .

These massive shipping disruptions have exposed the disadvantages of the popular  just-in-time  practice for managing inventory.

By keeping as little of the materials needed to make their products on hand, companies become more vulnerable to shortages and transportation snafus. And when manufacturers are unable to make their products quickly, shortages occur and prices surge.

This approach, especially when it involves the reliance on far-flung suppliers, has left businesses much more susceptible to market shocks.

Labor complications

The beginning of the pandemic also sent  shock waves through labor markets  with  lasting effects .

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