In this article, we will discuss the 20 countries with the highest inflation in 2023. If you want to skip our discussion on the global macroeconomic environment, you can go directly to the 5 Countries With The Highest Inflation in 2023.
Inflation is one of the most keenly observed economic indicators, as it directly influences the purchasing power of a currency. Inflation can be caused by factors such as high production costs, disruption in the supply chain, and an increase in monetary supply. It's important to note that inflation is not inherently detrimental. A low and constant increase in inflation of about 1.5 to 4% is often a marker of a strong economy with a harmonious balance between wages and prices of consumer goods. The Federal Open Market Committee (FOMC) believes that maintaining a long-term inflation rate of 2% aligns most closely with the Federal Reserve's directive to achieve high employment and price stability. However, when inflation experiences a swift increase, it poses a significant threat to a country's economy, leading to a decline in purchasing power. Individuals dependent on a fixed salary or pension may find it difficult to afford the same goods and services that they could before the inflationary period. Although hyperinflation is a rare phenomenon, it has happened in the past in countries like Germany and Russia. Once set in, hyperinflation can quickly spiral out of control, causing irreversible damage to a country.
In the recent past, the global surge in inflation has resulted in widespread economic uncertainty across various regions. Termed as the ‘worst inflation spike in decades’ by Forbes, this global rise in inflation was triggered by two pivotal events, namely the coronavirus pandemic in 2020 and the Russian invasion of Ukraine in 2022. In an attempt to control this inflation, central banks and economic organizations across the world attempted to hike interest rates to slow down their economies. Taking the example of the US, the federal funds rate has undergone a significant increase, rising from nearly zero in March 2022 to the current range of 5.25% to 5.5%. This marks the highest level in more than 22 years. The escalation in interest rates is part of the Fed's proactive approach to addressing inflationary pressures and maintaining economic stability.
Venezuela currently has the highest inflation rate in the world. On the other hand, Cameroon, a Central African country, has the lowest inflation rate in the world as of August 2023. You can also check out the 20 Countries With Lowest Inflation Rates In The World here. Interestingly, Turkey is among the top 10 countries with highest inflation in 2023. It is also one of the countries with the highest inflation in 2023 in Europe. However, this scenario doesn't necessarily reflect a bleak future. Policymakers worldwide are observing positive developments in inflation rates across numerous countries. For example, the United States witnessed a drop in inflation from 9.1% in mid-2022 to 3.2% almost a year later. This change came about after a rigorous period of hikes in interest rates across the country.
One of the easiest ways to protect oneself from the effects of inflation is to invest in commodities that protect your purchasing power, a practice known as inflation hedging. Beyond traditional options like real estate, individuals can explore certain gold stocks as possible investment options. Gold stocks, such as Kinross Gold Corp (NYSE:KGC), Newmont Corporation (NYSE:NEM), and Agnico Eagle Mines (NYSE:AEM), provide investment avenues. Kinross Gold Corp (NYSE:KGC), a Canadian mining company specializing in gold and silver, is often recognized among the top 10 gold mining companies globally. Agnico Eagle Mines (NYSE:AEM), another Canadian-based gold-mining company, operates mines in Canada, Australia, and Finland, positioning it as a solid choice for inflation hedging.
Here's what Old West Management said about Agnico Eagle Mines Limited (NYSE:AEM) in its Q4 2022 investor letter:
“Agnico Eagle Mines Limited (NYSE:AEM) is the third largest gold miner in the world with mines in Canada, Australia, Finland, and Mexico. Although we have long respected the company, we became shareholders when they acquired our portfolio holding, Kirkland Lake Gold. Agnico chairman Sean Boyd is one of the most respected executives in the mining industry. He was appointed CEO in 1998 and was recently appointed Executive Chairman. Boyd is a large shareholder and perfectly fits our owner/manager role. This year, the company is projected to make nearly $1 billion in net income on $5.8 billion in revenue with $758 million of free cash flow. Net income has been growing 15% per year for several years. Agnico has a fortress balance sheet with $1.3 billion of long-term debt, which is only 2 times EBITDA, and $820 million cash in the bank. The stock trades at $55 per share, which is 26 times earnings with a 2.9% dividend yield.”
Our Methodology
We shortlisted the 20 countries with the highest inflation in 2023 by consulting several reputable sources, including Trading Economics, Forbes, and the International Monetary Fund (IMF). The selection process considered the Consumer Price Index (CPI) as a key indicator, reflecting the change in consumer purchasing power over the course of the year. We have ranked the countries in ascending order of the latest inflation rates as of 2023.
2023 Inflation Rate = 25.83%
Laos is a Southeast Asian country with an inflation rate of 25.83%. While this may seem like a high number, Laos has seen a decline in inflation from a record 41.26% earlier in the year to almost 26% now.
2023 Inflation Rate = 26.47%
Burundi is an East African country with an oscillating inflation rate throughout the year. The country started with an inflation rate of 26.8% in January 2023 and closed at 26.47%.
2023 Inflation Rate = 26.9%
Located in East Africa, Malawi saw a net increase of 1% in its inflation rate through the year. The highest inflation rate in the country was recorded in May 2023 at 29.2%, which dropped in the following months.
2023 Inflation Rate = 27.33%
Nigeria is a West African country on the Gulf of Guinea. It is the largest economy in Africa, with an inflation rate of 27.33%. Nigeria has seen a steady increase in inflation, starting from 21.47% in January 2023 to 27.33% in October.
2023 Inflation Rate = 28.58%
Myanmar is a Southeast Asian country with an agricultural economy. The country’s inflation rate has dropped from 34.97% earlier in the year to 28.58% in October 2023.
2023 Inflation Rate = 29.2%
Ethiopia is an East African country with a mixed economy and a large public sector. As the government of Ethiopia makes efforts to privatize most industries, the country has seen a steady decline in inflation rates that only recently increased from 28.3% to 29.2%.
2023 Inflation Rate = 29.2%
Pakistan, a Southeast Asian country, has secured the fourteenth position on our list of the 20 countries with the highest inflation in 2023. The country experienced a sharp increase in inflation in 2023.
2023 Inflation Rate = 34.13%
Cuba is an island country in the Caribbean with a declining economy since the onset of Covid 19. Sanctions from the Trump administration in 2020 caused a further decline in the economy, resulting in Cubans facing shortages of necessities. However, the inflation rate in the country has gone down significantly compared to the beginning of the year.
2023 Inflation Rate = 35.2%
Ghana is a West African country that experienced a macroeconomic crisis in 2022. The inflation rate in Ghana at the beginning of 2023 was 50.3%, which has significantly reduced to 35.2% as of December.
2023 Inflation Rate = 35.8%
Egypt is one of the largest economies in Africa. The inflation rate in Egypt has risen from 25.8% in January 2023 to 35.8% in October 2023. This rise in inflation resulted majorly from the Russia-Ukraine war, as Egypt heavily relied on both countries for its wheat imports.
2023 Inflation Rate = 37.6%
Congo is a Central African country that has been hit quite hard by global inflation. Within a single year, the inflation in Congo rose from 11.38% to 37.6%.
2023 Inflation Rate = 39.2%
Iran is a Middle Eastern country with a fluctuating economy due to political unrest. In April 2023, Iran saw a surge in inflation due to unsuccessful economic policies implemented by the government. However, there has been a subsequent decline, and the 2023 inflation rate has dropped to 39.2%.
2023 Inflation Rate = 43.4%
Suriname is a South American country with an inflation rate of 43.4%. This rate represents a significant decrease compared to the inflation rate recorded in April of this year. The average inflation rate in Suriname is expected to decrease further in the next five years.
2023 Inflation Rate = 54.48%
Sierra Leone is an African nation that faced multiple economic setbacks in 2022, resulting in worsened food insecurity, a slowed GDP, and a massive increase in inflation to 54.48% in October 2023.
2023 Inflation Rate = 61.36%
Turkey, situated in the Middle East, experienced an initial inflation rate of 80% at the start of the year. This surge was caused by the Turkish president's implementation of low-interest policies, resulting in the devaluation of the Turkish Lira. Although inflation significantly declined during the first half of the year, it is showing signs of an upward trajectory again.
To hedge against inflation, individuals commonly turn to stocks for investment, including options like Kinross Gold Corp (NYSE:KGC), Newmont Corporation (NYSE:NEM), and Agnico Eagle Mines (NYSE:AEM).
Click to continue reading and see the 5 Countries With The Highest Inflation in 2023.
Suggested articles:
Disclosure: None. 20 Countries With The Highest Inflation in 2023 is originally published on Insider Monkey.
