Inflation is rising again around the world

Inflation in developed countries has started climbing again. As a result, countries such as New Zealand, Japan and South Korea are raising interest rates.

The European Central Bank is also expected to raise its rate by 2.5%. The US Federal Reserve may follow suit later.

The main driver is rising energy prices caused by the war in the Middle East. Natural gas prices in Europe have more than doubled compared to levels before the Iran war.

In the US, gasoline prices, which were below $3 a gallon at the start of the year, have now risen above $4. As a result, annual inflation in the eurozone reached 3.3% in August.

The problem isn't limited to oil and gas. Core inflation, which excludes food and energy, has also risen from 2.7% to 2.9%.

Services prices in particular are rising in many countries. This suggests inflation may be spreading from the energy sector to other parts of the economy.

That's why central banks are reluctant to repeat the mistake of 2021–2022, when they were slow to act against inflation. Now, without waiting for prices to rise further, they are raising interest rates.

This suggests the world may be entering a new period of fighting inflation.