These countries have the highest inflation rates in the world

These countries have the highest inflation rates in the world

Inflation is tough to balance. While some inflation can be good for a country’s economy, regulators must often walk a tight rope to keep it at a healthy rate – and avoid dreaded hyperinflation.

Inflation erodes the purchasing power of a country’s currency – as a result, the amount of goods and services that can be bought for one currency unit (for instance one dollar) will decrease with inflation over time. Should inflation spike too high, or fluctuate at an irregular pace, it can create problems for businesses and consumers.

Consumers notice this at the gas station or the supermarket, as prices for products rise. Homebuyers will notice it with mortgage payments and borrowing costs. If inflation rises quicker than people’s income, then the cost of living will increase. The cost of borrowing also increases and lenders run the risk of encountering bad debt. Viewed through this lens, it seems the best aim for any country would be to keep inflation rates at low or negligible levels.

However, if inflation tracks too low, consumers and businesses are not encouraged to spend; should the purchasing power of money not decrease over time, then there is no incentive to spend in order to avoid a loss in value. Low spending can have a negative impact on businesses, while companies may also reduce capital investments, thus decreasing economic growth.

The worst case scenario is hyperinflation, which has notoriously ravaged economies in the past. In 1923, the price of a loaf of bread in Germany jumped from 250 marks in January to 200 trillion in November. More recently in 2009, hyperinflation in Zimbabwe prompted the government to cease printing its currency, as price increases had become rampant. In mid-November 2008, during the height of the country’s inflation crisis, Zimbabwe recorded a monthly inflation rate of 79.6 billion percent.

Examples of out-of-control inflation still exist today. Many countries around the world, typically those that have experienced political and economic upheaval over a period of time, are suffering from high inflation rates, and some are even facing hyperinflation.

According to the International Monetary Fund (IMF), the global inflation rate is currently at 3.6 percent. To keep track of some of the countries with the highest inflation rates in the world, Al Arabiya English has compiled an updated list below:

1) Venezuela
Venezuela has by far the highest inflation rate in the world. The Latin American country’s annual inflation in July was at 264,872 percent, down from 445, 482 percent in June. The country entered hyperinflation territory in 2016, and continues to face economic, as well as political, unrest. Venezuela’s socialist government, headed by President Nicolas Maduro, managed to bring down hyperinflation by curbing borrowing for businesses and applying stricter reserve requirements on banks.

2) Zimbabwe
Annual inflation in Zimbabwe rose to 175.66 percent in June, almost doubling from 97.85 percent in May, according to ZIMSTATS, the country’s statistics agency. This is the highest recorded inflation rate since 2009, when the country was forced to abandon its currency.

3) South Sudan
South Sudan’s annual inflation rate is currently at 56.10 percent, according to data website Trading Economics. The country declared independence from Sudan in 2011, but has since suffered from unrest and fighting between troops loyal to President Salva Kiir and his former deputy-turned-rival Riek Machar. The country continues to face a deep economic crisis following several years of conflict, according to the IMF

4) Argentina
Latin America’s third-largest economy is currently running an inflation rate of 54.4 percent. Last week, Argentina’s Minister of the Treasury Hernan Lacunza asked the International Monetary Fund to help the country restructure its debt payments on a $56 billion bail-out loan agreed in 2018 as it aims to calm market volatility.

5) Sudan
Annual inflation in Sudan hit 52.59 percent in July, up from 47.78 percent in June, according to state news agency SUNA. Mass protests earlier this year, triggered by a worsening economic crisis and limits on cash withdrawals, have exacerbated hyperinflation. The protests eventually led to the Sudanese military ousting long-time president Omar al-Bashir. The country recently transferred power to a civilian-led government, with Abdallah Hamdok as its new premier, after decades of authoritarian rule.

6) Iran
In August 2019, Iran’s average annual inflation hit 42.2 percent, up from 40.4 percent in July, according to the Statistical Center of Iran. The Iranian government in August announced its plans to cut four zeros from its currency and change its name from the rial to the toman, in an attempt to reset its ailing economy. The rial’s value had plunged in recent years, particularly since the US re-imposed sanctions on the country last year.

7) Liberia
The annual inflation rate in Liberia was recorded at 23.3 percent in April 2019, according to Trading Economics data. The West African nation is one of the poorest in the world. In 2018, Liberia’s economy grew by about 1.2 percent, a significant slowdown from an expansion rate of 2.5 percent in 2017, according to the World Bank. The country is otherwise known for its mining industry, particularly iron ore and gold production.

8) Haiti
The inflation rate in Haiti rose past 18 percent in July, with 60 percent of Haitians living below the poverty line. In a July-dated report to the United Nations Security Council on Haiti, UN Secretary-General Antonio Guterres said that the political situation, food shortages, and a weakening economy had created a “potentially explosive” situation in the Caribbean country. The Haitian parliament recently narrowly approved a new prime minister amid protests caused by a shortage of fuel, local Haitian news reported.

9) Sierra Leone
As one of the poorest countries in the world, the West African nation recorded an annual inflation rate of 17.46 percent as of March. After concluding its review mission to Sierra Leone, the IMF recommended that the country step up its structural reform efforts to manage fiscal risks, ensure greater accountability, and diversify the economy.

10) Angola
According to Trading Economics, Angola’s annual inflation rate rose to 17.24 percent in July 2019, up from 16.94 percent in June. In December 2018, in exchange for a $3.7 billion financial assistance program from the IMF, authorities agreed to remove water and energy subsidies and implement VAT. Between 2001 and 2019 inflation has averaged 35.21 percent, reaching a high of 241.08 percent in January 2001.

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