There can be little question that numerous countries are currently experiencing a very serious inflationary surge. Indeed, recent press reports note that more than forty (40!) countries are currently running double digit rates of inflation. Of this number, there are several important Asian economies. The two most important Asian economies (apart from Japan) are currently running inflation at 8-9% plus. Reference here is, of course, to the Chinese and Indian economies. In fact, wholesale prices are rising at solid double digit rates in these key economies, with the Reserve Bank of India reporting producer prices in the mid-teen range in its latest report. Furthermore, food and energy costs constitute an extraordinarily large share of consumer expenditures in the developing economies of Asia, an estimated 40-50%, compared to a mere 10% or so in the U.S.
The key questions are: what accounts for this inflationary surge, and what are the future prospects for inflation globally?
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