UK vs worldwide inflation

Inflation rates around the globe are highly correlated. There is evidence that they have been for millennia. This is partly because short-term inflation rates are strongly influenced by commodity prices. However even longer-term influences are also similar in many nations e.g. demand and demographics.

The UK inflation rate follows a similar pattern to other developed nations but is often slightly higher than them – see chart below.

Some other countries can have consistently lower inflation rates. For example, until the last few years, the inflation rate in Japan averaged about 4% lower than other G7 countries. Note, this was not an effect of the so-called “lost decades” but mainly reflected the generally increasing strength of the Yen over the last 50 years. (See Inflation Matters book, chapter 13)

The interactive chart below shows the end of year inflation rates across the G7 countries and China. Click on countries in the legend to see how they vary.

Worldwide inflation rates (G7 + China)
Data sources: IMF database for most historical data until 2013. 2014 from country statistical offices.
Note: Data refers to end of year inflation rates in each country (except for some missing historical data for China and Germany where annual averages have had to be used).