Global views on inflation

February: One year on, is war still to blame for rising prices?

Ipsos | Almanac 2024 | Inflation

February 2023 marked the one-year anniversary of Russia’s invasion of Ukraine, the largest attack on a European country since World War II. The economic effect of the resulting sanctions placed on Russia and the disruption to supply chains was felt around the world.

Back in June 2022 when we polled the global public on this, 72% of people globally thought the war in Ukraine and its consequences was contributing to the rising cost of living in their country, ranking as the second biggest factor. As we close on 2023, this proportion has fallen 10 points to 62%, with the global public now more likely to blame the state of the global economy, the interest rate in their country and the policies of their national government (each mentioned by almost seven in ten people).

Regardless of the cause, inflation hurts. In our What Worries the World tracker, it has now been the leading global concern for 20 consecutive months.

In November 2023, the five countries most concerned about inflation were Argentina (68%), Canada (57%), Türkiye (55%), Poland (54%) and Singapore (53%). This comes as no surprise: Argentina has been the most concerned country about inflation for over a year and Canada, Türkiye, Poland and Singapore have each spent at least 9 of the past 12 months in the top five.

What’s driving inflation?

The countries where consumers thus most expect their disposable income to sink in 2024 are generally richer ones: 43% in France, 41% in Canada and Great Britain, 40% in Sweden, 38% in Switzerland. Only in Türkiye, where inflation has been a major concern for several years now, are expectations still grimmer (44% expect a fall).

There are also interesting, though subtle, differences among countries as to their perceptions of the causes of the increase in the cost of living. Consumers in countries where private debt is on the high side and interest rates are flexible tend to blame the interest rate level (78% in Australia, 77% in Canada and New Zealand, 76% in Great Britain, 73% in the United States). Conversely, consumers are far less likely to blame interest rates in Germany (56%), the Netherlands (59%) or Belgium (60%). In those countries, consumers tend to benefit from an increase in the returns on their saving accounts.

More than seven in ten put the blame on businesses making excessive profits in Indonesia (80%), Thailand, the Philippines (both 74%), Great Britain and France (both 71%).

Globally, almost one in two (46%) have noticed shrinkflation in their country, with product sizes becoming smaller while prices remain the same. Shrinkflation appears particularly prevalent in Great Britain, France, and Germany, where more than six in ten people say they’ve noticed it.

Consumers are also unequally sensitive to shrinkflation. On average globally, one in two (48%) say shrinkflation is unacceptable. French consumers are particularly hostile to this, with almost seven in ten (67%) saying it’s unacceptable, followed by Türkiye (66%), Canada (64%) and Sweden (63%). Meanwhile, fewer than one in four see a problem with shrinkflation in Indonesia (20%) or China (22%). All this shows that inflation doesn’t affect consumers equally, either within or across borders.

Ipsos | Almanac 2024 | Inflation

Are we over the worst of it?

Despite one in five people (21%) think inflation in their country will never return to normal, there are some signs that, while things still look bleak, the worst may have passed. The November edition of our Global Inflation Monitor  finds optimism beginning to rise. The proportions of people expecting their standard of living (33%) and disposable income (31%) to rise over the next year has increased 14 points and 12 points respectively since April 2022.

While inflation remains the dominant concern in our What Worries the World survey – and shockingly high in some countries – it has at least fallen 5pp from its peak in February 2023 (down from 43% to 38%).

Similarly, in November our Global Consumer Confidence Index sits at 47.2, up from 43.0 at the same time last year. Eleven countries show significant increases compared to 12 months ago, with consumer confidence only significantly down in Israel (-10.0). But we may still be too close to tell. In the medium term, perhaps the post-pandemic economy may prove to be more of a Monet than a Mona Lisa – and look more coherent once we have gained some distance.