2022 has been a year of brutal inflation

“Low inflation is indeed the problem of this era.” Thus said John Williams, president of the Federal Reserve Bank of New York, in late 2019, espousing the dominant view at the time. Fast forward to the present, and the problem is the exact opposite. Just about every country in the world has grappled with soaring prices in 2022. The situation is all but certain to improve in the coming year, but at a severe cost to economic growth.

What made 2022 so unusual was the breadth of price pressures. The global rate of inflation will finish the year at roughly 9%. For many developing countries high inflation is a recurrent challenge. But the last time that inflation was so elevated in rich countries was the early 1980s. In America consumer prices are on track to have risen by about 7% in 2022, the highest in four decades. In Germany the rate will be closer to 10%, its first bout of double-digit inflation since 1951.