Markets in a Minute
Mapped: Inflation Forecasts by Country in 2022
This infographic is available as a poster.
This infographic is available as a poster.
Mapped: Inflation Forecasts by Country in 2022
What will inflation look like in 2022?
Today, this is a question on many investors’ minds. Across several countries, inflation has hit its highest level in decades. Supply shortages and massive monetary stimulus have contributed to increasing consumer prices. Asset prices, including houses, have also risen significantly.
In this Markets in a Minute from New York Life Investments we show inflation by country in 2022 according to IMF projections.
Inflation by Country in 2022
Inflation rates are based on the annual percentage change in average consumer prices. This measures the average level of prices in a country based on a basket of goods and services over a given time period.
Here are forecasted inflation rates for the largest economies worldwide, and how they compare to pre-pandemic levels:
| Inflation Rate, Average Consumer Prices (Annual % Change) | 2019 | 2022 |
|---|---|---|
| 🇺🇸 United States | 1.5% | 3.5% |
| 🇨🇳 China | 2.9% | 1.8% |
| 🇯🇵 Japan | 0.5% | 0.5% |
| 🇩🇪 Germany | 1.4% | 1.5% |
| 🇬🇧 United Kingdom | 1.8% | 2.6% |
| 🇮🇳 India | 4.8% | 4.9% |
| 🇫🇷 France | 1.3% | 1.6% |
| 🇮🇹 Italy | 0.6% | 1.8% |
| 🇨🇦 Canada | 1.9% | 2.6% |
| 🇰🇷 South Korea | 0.4% | 1.6% |
| 🇷🇺 Russia | 4.5% | 4.8% |
| 🇧🇷 Brazil | 3.7% | 5.3% |
| 🇦🇺 Australia | 1.6% | 2.1% |
| 🇪🇸 Spain | 0.7% | 1.6% |
| 🇲🇽 Mexico | 3.6% | 3.8% |
| 🇮🇩 Indonesia | 2.8% | 2.8% |
| 🇮🇷 Iran | 34.6% | 27.5% |
| 🇳🇱 Netherlands | 2.7% | 1.7% |
| 🇸🇦 Saudi Arabia | -2.1% | 2.2% |
| 🇨🇭 Switzerland | 0.4% | 0.6% |
With the highest rate across advanced economies, the U.S. could see inflation at 3.5% in 2022. Over the last two years, the U.S. central bank has doubled the assets on its balance sheet, which stand at roughly 27% of GDP.
Inflation rates tell a different story in China. Rates are forecasted to fall below pre-pandemic levels, reaching 1.8%. In fact, across East Asia, prices have been largely immune to inflationary pressures, but this could change in 2022.
While inflation is rising in Europe, it’s at roughly half the rate as the U.S., with Germany, France, and Italy projected to see inflation rates below 2%. However, the UK is an outlier, with inflation set to reach 2.6%.
What Are the Effects of Inflation?
What is driving inflation around advanced economies?
In the U.S., energy prices rose over 29% between 2020 and 2021. Meanwhile, food costs have increased 6.5%, driven by labor shortages, domestic demand, rising cost of feed and other inputs.
Looking forward, Kraft Heinz, General Mills, Starbucks and several other corporations have announced price hikes in 2022.
| Consumer Price Inflation (Annual % Change 2020-2021) | Energy | Food | All Items |
|---|---|---|---|
| 🇺🇸 United States | 29.3% | 6.5% | 7.0% |
| 🇯🇵 Japan | 16.4% | 2.6% | 0.8% |
| 🇩🇪 Germany | 18.3% | 5.9% | 5.3% |
| 🇬🇧 United Kingdom | 24.5% | 4.2% | 4.8% |
| 🇫🇷 France | 19.6% | 1.4% | 2.8% |
| 🇮🇹 Italy | 29.4% | 2.9% | 3.9% |
| 🇨🇦 Canada | 21.2% | 5.7% | 4.8% |
Source: Refinitiv, OECD
In Japan, businesses are taking a different approach. Instead of input costs passing on to consumers, companies are absorbing the costs to avoid the risk of losing business. For instance, when Kikkoman announced 4-10% increases in 2021, it made national news.
This has been a typical practice for decades amid low growth, stagnant wages, and a deflationary environment.
Highest Inflation by Country in 2022
Venezuela is the highest in the world, with a forecasted 2,000% rise in inflation.
Since October, the central bank has been printing as many as $100 million bolívars per week to help stabilize the exchange rate against the U.S. dollar. Hyperinflation has run rampant since 2017, with U.S oil sanctions adding significant challenges to the economy.
These bans on Venezuelan exports have caused damaging economic impacts and instability.
| Inflation Rate, Average Consumer Prices (Annual % Change) | 2019 | 2022 |
|---|---|---|
| 🇻🇪 Venezuela | 19,906% | 2,000% |
| 🇸🇩 Sudan | 51.0% | 41.8% |
| 🇸🇷 Suriname | 4.4% | 31.7% |
| 🇾🇪 Yemen | 12.0% | 31.5% |
| 🇿🇼 Zimbabwe | 255.3% | 30.7% |
| 🇮🇷 Iran | 34.6% | 27.5% |
| 🇸🇸 South Sudan | 51.2% | 24.0% |
| 🇿🇲 Zambia | 9.2% | 19.2% |
| 🇭🇹 Haiti | 17.3% | 15.5% |
| 🇹🇷 Turkey | 15.2% | 15.4% |
| 🇦🇴 Angola | 17.1% | 14.9% |
| 🇳🇬 Nigeria | 11.4% | 13.3% |
| 🇸🇱 Sierra Leone | 14.8% | 13.3% |
| 🇹🇲 Turkmenistan | 5.1% | 13.0% |
| 🇱🇷 Liberia | 27.0% | 11.8% |
| 🇺🇿 Uzbekistan | 14.5% | 10.9% |
| 🇬🇳 Guinea | 9.5% | 9.9% |
| 🇲🇼 Malawi | 9.4% | 9.0% |
| 🇬🇭 Ghana | 7.1% | 8.8% |
| 🇵🇰 Pakistan | 6.7% | 8.5% |
| 🇧🇾 Belarus | 5.6% | 8.3% |
| 🇱🇾 Libya | 0.2% | 8.0% |
| 🇰🇬 Kyrgyz Republic | 1.1% | 7.8% |
| 🇸🇹 São Tomé and Príncipe | 7.7% | 7.8% |
| 🇩🇿 Algeria | 2.0% | 7.6% |
| 🇲🇳 Mongolia | 7.3% | 7.3% |
| 🇺🇦 Ukraine | 7.9% | 7.1% |
| 🇧🇹 Bhutan | 2.8% | 6.9% |
| 🇲🇺 Mauritius | 0.5% | 6.6% |
| 🇰🇿 Kazakhstan | 5.2% | 6.5% |
| 🇲🇲 Myanmar | 8.6% | 6.5% |
| 🇹🇯 Tajikistan | 7.8% | 6.5% |
| 🇹🇳 Tunisia | 6.7% | 6.5% |
| 🇨🇩 DRC | 4.7% | 6.4% |
| 🇲🇬 Madagascar | 5.6% | 6.4% |
| 🇲🇿 Mozambique | 2.8% | 6.4% |
| 🇪🇬 Egypt | 13.9% | 6.3% |
| 🇬🇲 Gambia | 7.1% | 6.3% |
| 🇯🇲 Jamaica | 3.9% | 6.3% |
| 🇱🇰 Sri Lanka | 4.3% | 6.2% |
| 🇺🇾 Uruguay | 7.9% | 6.1% |
| 🇦🇲 Armenia | 1.4% | 5.8% |
| 🇲🇩 Moldova | 4.3% | 5.8% |
| 🇧🇩 Bangladesh | 5.5% | 5.7% |
| 🇳🇵 Nepal | 4.6% | 5.7% |
| 🇬🇪 Georgia | 4.9% | 5.4% |
| 🇧🇷 Brazil | 3.7% | 5.3% |
| 🇱🇸 Lesotho | 5.2% | 5.3% |
| 🇧🇼 Botswana | 2.7% | 5.0% |
| World | 3.5% | 3.8% |
Like Venezuela, Iran faces high inflation, compounded by 960 U.S. sanctions. In addition, the country has been cut off from the international banking messaging system, SWIFT, to increase pressure on nuclear negotiations.
What this means is that Iranian banks can’t pay for exports or receive payment for imports.
Lowest Inflation by Country in 2022
On the other hand, Saint Kitts and Nevis is the only country projected to have negative inflation in 2022, at -0.5%. Not only that, disinflation is projected to increase from pre-pandemics levels.
| Inflation Rate, Average Consumer Prices (Annual % Change) | 2019 | 2022 |
|---|---|---|
| 🇰🇳 Saint Kitts and Nevis | -0.3% | -0.5% |
| 🇹🇹 Trinidad and Tobago | 1.0% | 0.0% |
| 🇬🇷 Greece | 0.5% | 0.4% |
| 🇯🇵 Japan | 0.5% | 0.5% |
| 🇬🇩 Grenada | 0.6% | 0.6% |
| 🇨🇭 Switzerland | 0.4% | 0.6% |
| 🇸🇲 San Marino | 1.0% | 0.9% |
| 🇨🇾 Cyprus | 0.6% | 1.0% |
| 🇵🇼 Palau | 0.6% | 1.0% |
| 🇰🇲 Comoros | 3.7% | 1.2% |
| 🇲🇦 Morocco | 0.2% | 1.2% |
| 🇵🇹 Portugal | 0.3% | 1.3% |
| 🇹🇭 Thailand | 0.7% | 1.3% |
| 🇱🇺 Luxembourg | 1.7% | 1.4% |
| 🇦🇩 Andorra | 0.7% | 1.5% |
| 🇧🇳 Brunei Darussalam | -0.4% | 1.5% |
| 🇨🇷 Costa Rica | 2.1% | 1.5% |
| 🇩🇪 Germany | 1.4% | 1.5% |
| 🇲🇪 Montenegro | 0.4% | 1.5% |
| 🇸🇬 Singapore | 0.6% | 1.5% |
| 🇹🇼 Taiwan | 0.5% | 1.5% |
| 🇨🇻 Cabo Verde | 1.1% | 1.6% |
| 🇩🇰 Denmark | 0.7% | 1.6% |
| 🇫🇮 Finland | 1.1% | 1.6% |
| 🇫🇷 France | 1.3% | 1.6% |
| 🇰🇷 South Korea | 0.4% | 1.6% |
| 🇲🇭 Marshall Islands | -0.5% | 1.6% |
| 🇪🇸 Spain | 0.7% | 1.6% |
| 🇸🇪 Sweden | 1.7% | 1.6% |
| 🇦🇼 Aruba | 3.9% | 1.7% |
| 🇫🇯 Fiji | 1.8% | 1.7% |
| 🇳🇱 Netherlands | 2.7% | 1.7% |
| 🇧🇦 Bosnia and Herzegovina | 0.6% | 1.8% |
| 🇨🇳 China | 2.9% | 1.8% |
| 🇮🇱 Israel | 0.8% | 1.8% |
| 🇮🇹 Italy | 0.6% | 1.8% |
| 🇲🇹 Malta | 1.5% | 1.8% |
| 🇸🇮 Slovenia | 1.6% | 1.8% |
| 🇧🇬 Bulgaria | 2.5% | 1.9% |
| 🇮🇪 Ireland | 0.9% | 1.9% |
| 🇵🇷 Puerto Rico | 0.1% | 1.9% |
| 🇦🇬 Antigua and Barbuda | 1.4% | 2.0% |
| 🇧🇯 Benin | -0.9% | 2.0% |
| 🇨🇲 Cameroon | 2.5% | 2.0% |
| 🇭🇷 Croatia | 0.8% | 2.0% |
| 🇩🇯 Djibouti | 3.3% | 2.0% |
| 🇩🇲 Dominica | 1.5% | 2.0% |
| 🇬🇦 Gabon | 2.0% | 2.0% |
| 🇬🇼 Guinea-Bissau | 0.3% | 2.0% |
| 🇳🇴 Norway | 2.2% | 2.0% |
Greece, Japan, and Switzerland all are forecasted to see inflation fall below 1%. Suppressed demand and low national economic output are factors behind low inflation rates in Greece, which has led to downward pressures on inflation.
The Future of Inflation Worldwide
A combination of factors unique to COVID-19 have pushed inflation to multi-decade highs. But will inflation eventually fade over time?
For many countries, the IMF forecasts that it will. By 2025, U.S. inflation is projected to reach 2.5%, while many advanced countries could see rates at or below the 2% target often set by central banks.
| Inflation Rate, Average Consumer Prices (Annual % Change) | 2022 | 2025E |
|---|---|---|
| 🇺🇸 United States | 3.5% | 2.5% |
| 🇨🇳 China | 1.8% | 2.0% |
| 🇯🇵 Japan | 0.5% | 1.0% |
| 🇩🇪 Germany | 1.5% | 1.8% |
| 🇬🇧 United Kingdom | 2.6% | 2.0% |
| 🇮🇳 India | 4.9% | 4.0% |
| 🇫🇷 France | 1.6% | 1.2% |
| 🇮🇹 Italy | 1.8% | 1.3% |
| 🇨🇦 Canada | 2.6% | 2.1% |
| 🇰🇷 South Korea | 1.6% | 2.0% |
| 🇷🇺 Russia | 4.8% | 4.0% |
| 🇧🇷 Brazil | 5.3% | 3.1% |
| 🇦🇺 Australia | 2.1% | 2.4% |
| 🇪🇸 Spain | 1.6% | 1.7% |
| 🇲🇽 Mexico | 3.8% | 3.0% |
| 🇮🇩 Indonesia | 2.8% | 3.0% |
| 🇮🇷 Iran | 27.5% | 25.0% |
| 🇳🇱 Netherlands | 1.7% | 1.9% |
| 🇸🇦 Saudi Arabia | 2.2% | 2.0% |
| 🇨🇭 Switzerland | 0.6% | 1.0% |
Structural forces that began to take hold in the 1980s have led to declining inflation rates for many years. These forces are not likely going away. Globalization is unlikely to stop and slowing energy demand may cause energy prices to level off.
In addition, as vaccination rates increase and more people enter the workforce, spending could move towards services, lessening the price pressures on goods. Central banks around the world have already started tightening monetary policy and stimulus measures, such as tapering bond purchases, which could help lower inflation.
As countries brace for higher inflation in the short-term, the long-term view may return to pre-pandemic trends.
Markets in a Minute
The Average American’s Financial Portfolio by Account Type
From retirement plans to bank accounts, we show the percentage of an American’s financial portfolio that is typically held in each account.
The Average American’s Financial Portfolio by Account Type
Where does the average American put their money? From retirement plans to banks, the typical financial portfolio includes a variety of accounts.
In this graphic from Morningstar, we explore what percentage of a person’s money is typically held within each account.
Breaking Down a Typical Financial Portfolio
People put the most money in employer retirement plans, which make up nearly two-fifths of the average financial portfolio. Bank accounts, which include checking, savings, and CDs, hold the second-largest percentage of people’s money.
| Account Type | % of Financial Portfolio |
|---|---|
| Employer retirement plan | 38% |
| Bank account | 23% |
| Brokerage/investment account | 14% |
| Traditional IRA | 10% |
| Roth IRA | 7% |
| Crypto wallet/account | 4% |
| Education savings account | 3% |
| Other | 1% |
Source: Morningstar Voice of the Investor Report 2024, based on 1,261 U.S. respondents.
Outside of employer retirement plans and bank accounts, the average American keeps nearly 40% of their money in accounts that advisors typically help manage. For instance, people also hold a large portion of their assets in investment accounts and IRAs.
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Account Insight for Advisors
Given the large focus on retirement accounts in financial portfolios, advisors can clearly communicate how they will help investors achieve their retirement goals. Notably, Americans say that funding retirement accounts is a top financial goal in the next three years (39% of people), second only to reducing debt (40%).
Americans also say that building an emergency fund is one of their financial goals (35%), which can be supported by the money they hold in bank accounts. However, it can be helpful for advisors to educate clients on the lower return potential of savings accounts and CDs. In comparison, advisors can highlight that investment or retirement accounts can hold assets with more potential for building wealth, like mutual funds or ETFs. With this knowledge in mind, clients will be better able to balance short-term and long-term financial goals.
The survey results also highlight the importance of advisors staying up to date on emerging trends and products. People hold 4% of their money in crypto accounts on average, and nearly a quarter of people said they hold crypto assets like bitcoin. Advisors who educate themselves on these assets can more effectively answer investors’ questions.
Markets in a Minute
5 Factors Linked to Higher Investor Engagement
Engaged investors review their goals often and are more involved in decisions, but which factors are tied to higher investor engagement?
5 Factors Linked to Higher Investor Engagement
Imagine two investors. One investor reviews their investment goals every quarter and actively makes decisions. The second investor hasn’t reviewed their goals in over a year and doesn’t take part in any investment decisions. Are there traits that the first, more involved investor would be more likely to have?
In this graphic from Morningstar, we explore five factors that are associated with high investor engagement.
Influences on Investor Engagement
Morningstar scores their Investor Engagement Index from a low of zero to a high of 100, which indicates full engagement. In their survey, they discovered five traits that are tied to higher average engagement levels among investors.
| Factor | Investor Engagement Index Score (Max = 100) |
|---|---|
| Financial advisor relationship | Don’t work with financial advisor: 63 |
| Work with financial advisor: 70 | |
| Sustainability alignment | No actions/alignment: 63 |
| Some/full alignment: 74 | |
| Trust in AI | Low trust: 61 |
| High trust: 74 | |
| Risk tolerance | Conservative: 62 |
| Aggressive: 76 | |
| Comfort making investment decisions | Low comfort: 42 |
| High comfort: 76 |
Morningstar’s Investor Engagement Index is equally weighted based on retail investors’ responses to seven questions: feeling informed about composition and performance of investments, frequency of investment portfolio review, involvement in investment decision-making, understanding of investment concepts and financial markets, frequency of goals review, clarity of investment strategy aligning to long-term goals, and frequency of engagement in financial education activities.
On average, people who work with financial advisors, have sustainability alignment, trust AI, and have a high risk tolerance are more engaged.
The starkest contrast was that people with high comfort making investment decisions have engagement levels that are nearly two times higher than those with low comfort. In fact, people with a high comfort level were significantly more likely to say they were knowledgeable about the composition and performance of their investments (84%) vs. those with low comfort (18%).
Personalizing Experiences Based on Engagement
Advisors can consider adjusting their approach depending on an investor’s engagement level. For example, if a client has an aggressive risk tolerance this may indicate the client is more engaged. Based on this, the advisor could check if the client would prefer more frequent portfolio reviews.
On the other hand, soft skills can play a key role for those who are less engaged. People with low comfort making investment decisions indicated that the top ways their financial advisor provides value is through optimizing for growth and risk management (62%), making them feel more secure about their financial future (38%), and offering peace of mind and relief from the stress of money management (30%).
A New Framework for Personalized Financial Portfolio Alignment
The Average American’s Financial Portfolio by Account Type
5 Factors Linked to Higher Investor Engagement
The Top 5 Reasons Clients Fire a Financial Advisor
The Top 5 Reasons Clients Hire a Financial Advisor
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