At the same time, China’s policy of blocking areas with Covid-19 outbreaks has exacerbated the problem.
This week, the OECD announced sobering updates. In seven Eastern European nations, the inflation rate is now expected to exceed double digits. The estimated rate for the Netherlands this year nearly tripled to 9.2%; Australia doubled to 5.3%. And like the United States, Great Britain and Germany saw inflation rates hit a four-decade high, well above previous forecasts.
This is likely to affect household incomes and savings as companies struggle to invest and create jobs.
Central banks in the United States, Great Britain, Australia and India have recently moved aggressively to contain the rapid rise in prices by raising interest rates. Even the European Central Bank, which had been reluctant to raise rates for fear of triggering a recession, said Thursday it would end asset purchases and raise its key interest rate by a quarter of a point at next month’s meeting, and perhaps even more in September.