Which Countries Have the Lowest Inflation?
Investors are bracing for longer inflation.
The Federal Reserve indicated that more restrictive monetary policy is in the cards amid strong employment gains. In Europe, while inflation has fallen, it is still far above the 2% target. Across the Euro area inflation is estimated to have reached 8.5% in January.
At the same time, some countries have managed to tamp down inflation. Slower growth, cheaper import costs, and foreign exchange policy are some of the factors keeping inflation subdued.
As price pressures rattle global markets, the above infographic maps inflation rates globally using data from Trading Economics, focusing in on the countries with the lowest inflation levels.
World’s Lowest Inflation Rates
Many of the lowest inflation rates around the world are located in Asia, including Macau, China, Hong Kong, and Taiwan. In this region, widespread lockdowns strained growth and consumer spending, lessening inflationary pressures. Last year, Chinese consumers saved $2.2 trillion in bank deposits during these restrictions which were lifted earlier this year.
Inflation in the region was impacted by several other factors. Earlier on in the pandemic, Asian countries including China were less impacted by rising food costs, services inflation, and supply-chain disruptions, unlike what was seen in North America and Europe.
But now as China has reopened, some signs of inflation are beginning to appear. Food prices are up 4.8% annually in December, and hotel rates are rising.
RankCountry / RegionInflation Rate, Year-Over-YearDate
1 South Sudan-11.6%Dec 2022
2 Macau 0.8%Nov 2022
3 China1.8%Dec 2022
4 Hong Kong SAR1.8%Nov 2022
5 Oman2.1%Nov 2022
6 Panama2.1%Dec 2022
7 Seychelles2.5%Dec 2022
8 Vanuatu2.7%Mar 2022
9 Taiwan2.7%Dec 2022
10 Switzerland2.8%Dec 2022
11 Liechtenstein2.8%Dec 2022
12 Benin2.8%Dec 2022
13 Maldives2.8%Nov 2022
14 Niger3.1%Dec 2022
15 Brunei3.1%Nov 2022
16 Bolivia3.2%Nov 2022
17 Kuwait3.2%Nov 2022
18 Saudi Arabia3.3%Dec 2022
19 Cambodia3.6%Oct 2022
20 Fiji3.6%Dec 2022
21 Ecuador3.7%Dec 2022
22 Japan3.8%Nov 2022
23 Libya3.8%Nov 2022
24 Bermuda3.8%Oct 2022
25 Bahrain3.9%Nov 2022
26 Malaysia4.0%Nov 2022
27 Palestine4.1%Dec 2022
28 Iraq4.2%Nov 2022
29 Jordan4.4%Dec 2022
30 Tajikistan4.5%Nov 2022
31 Vietnam4.6%Dec 2022
32 Bhutan4.6%Nov 2022
33 Tanzania4.8%Dec 2022
34 New Caledonia4.9%Dec 2022
35 South Korea5.0%Dec 2022
36 Israel5.3%Dec 2022
37 Luxembourg5.4%Dec 2022
38 Swaziland5.5%Oct 2022
39 Indonesia5.5%Dec 2022
40 Gabon5.7%Oct 2022
41 Ivory Coast5.7%Nov 2022
42 Spain5.7%Dec 2022
43 India5.7%Dec 2022
44 Brazil5.8%Dec 2022
45 Thailand5.9%Dec 2022
46 France5.9%Dec 2022
47 Norway5.9%Dec 2022
48 Qatar5.9%Dec 2022
49 Djibouti6.1%Sep 2022
50 Somalia6.1%Dec 2022
51 Trinidad and Tobago6.2%Sep 2022
52 Papua New Guinea6.3%Sep 2022
53 Puerto Rico6.3%Nov 2022
54 Canada6.3%Dec 2022
55 Bahamas6.5%Sep/22
56 Belize6.5%Nov 2022
57 U.S.6.5%Dec 2022
58 Aruba6.6%Nov 2022
59 Singapore6.7%Nov 2022
60 East Timor6.7%Nov 2022
61 UAE6.8%Jun 2022
62 Namibia6.9%Dec 2022
63 Guyana6.9%Nov 2022
64 New Zealand7.2%Sep 2022
65 South Africa7.2%Dec 2022
66 Greece7.2%Dec 2022
67 Liberia7.2%Sep 2022
68 Australia7.3%Sep 2022
69 Malta7.3%Dec 2022
70 El Salvador7.3%Dec 2022
71 Albania7.4%Dec 2022
72 Cape Verde7.6%Dec 2022
73 Cameroon7.7%Sep 2022
74 Central African Republic7.7%Nov 2022
75 Togo7.7%Dec 2022
76 Mexico7.8%Dec 2022
77 Dominican Republic7.8%Dec 2022
78 Costa Rica7.9%Dec 2022
79 Cyprus7.9%Dec 2022
80 Mali8.0%Nov 2022
81 Nepal8.1%Nov 2022
82 Philippines8.1%Dec 2022
83 Paraguay8.1%Dec 2022
84 Barbados8.2%Oct 2022
85 Ireland8.2%Dec 2022
86 Uruguay8.3%Dec 2022
87 Morocco8.3%Nov 2022
88 Armenia8.3%Dec 2022
89 Peru8.5%Dec 2022
90 Lesotho8.5%Oct 2022
91 Algeria8.6%Nov 2022
92 Germany8.6%Dec 2022
93 Denmark8.7%Dec 2022
94 Bangladesh8.7%Dec 2022
95 Faroe Islands8.8%Sep 2022
96 Finland9.1%Dec 2022
97 Kenya9.1%Dec 2022
98 Cayman Islands9.2%Sep 2022
99 Guatemala9.2%Dec 2022
100 Guinea Bissau9.4%Nov 2022
*Inflation rates based on latest available data.
Globally, one outlier is South Sudan. Political instability and violence have depressed growth and inflation, which stood at -11.6% in December. As it faces a severe humanitarian crisis, the country has the lowest inflation rate worldwide.
Oil-producing nation Oman has also seen low inflation, at 2.1%. One reason for this is that the Omani rial is pegged to the U.S. dollar, keeping the currency anchored. Inflation has remained moderate over the last decade in the country.
The Country With the Lowest Inflation, by Region
In Europe, Switzerland has the lowest inflation rate, at 2.8%, or roughly one-third of the Euro area’s. It is also the lowest rate in the OECD. The country’s strong currency has shielded it from inflationary pressures and high import prices.
Meanwhile, Swiss production prices have risen marginally above inflation, to 4.1% annually in mid-2022. Last year, the Swiss central bank raised interest rates for the first time since 2007 from -0.75% to -0.25% following 20 years of deflation.
Panama has the lowest rate in Latin America. The dollarization of the Panamanian balboa has helped quash price pressures. In July, the government regulated the price of 72 items to keep the cost of living from rising after three weeks of protests as inflation climbed as high as 5.2% during the course of 2022.
With the lowest inflation in Asia, Macau witnessed the tourism industry fall off a cliff given lockdown measures, and the economy saw both its GDP and inflation collapse in 2022. Its real GDP is projected to have fallen close to 30% for the year.
Future Gazing
The IMF estimates that 84% of countries around the world will have lower inflation than last year. By 2024, both headline and core inflation are projected to remain above pre-pandemic levels at 4.1%.
Opposing forces of China’s reopening and weaker global growth could offset inflationary pressures, yet this interplay—among a host of other factors—remains to be seen.
The post Which Countries Have the Lowest Inflation? appeared first on Elements by Visual Capitalist.