Countries with the Highest Inflation (2023 Update!)
Inflation is a natural process that occurs in all global economies. It refers to the rate of increase in prices over a given period of time. The currency of any given country buys less than it did in previous times.
Countries with the highest inflation rates often find it difficult to afford basic necessities such as food prices, energy costs, and clothing. As we look at the countries with the highest rates, we’re going to explore what affects inflation rates as well as how they’re measured.
Inflation Around the World
Inflation impacts all aspects of the economy from consumer spending to government programs and interest rates. Understanding inflation around the world is crucial because inflation can reduce the value of investment returns.
When inflation rates get higher than wage growth, it can cause severe economic complications. If the money in any given country is worth less and people aren’t earning enough to keep up with the difference, the regular supply chain and demand are impacted. This is when people cannot afford basic living expenses.
What Affects Inflation Rates?
Inflation is divided into three basic types, demand-pull inflation, cost-push inflation, and built-in inflation.
- Demand-pull inflation: This occurs when the demand for goods increases faster than the economy’s capacity to produce. Demand is high but the supply chain can’t keep up, so prices rise.
- Cost-push inflation: This type of inflation happens when there is an increase in the production cost. If the raw materials used to make a product increase, the price for the final product rises because producers pass on their increased costs to the consumer.
- Built-in inflation: This occurs when there are expectations that inflation will continue, so wages must rise to keep up. As the prices increase, workers expect to be paid more to maintain their standard of living. This is typically referred to as a cost of living raises in the United States. Because labor costs increase, consumers pay more for goods and services.
Three Types of Inflation Indexes
There are also some different ways in which to measure inflation, depending on the statistics experts are interested in knowing.
Consumer Price Index
The Consumer Price Index (CPI), is the most widely used tool to measure inflation. The Bureau of Labor Statistics produces this index that is designed to measure price changes.
The CPI is built each month using 80,000 fixed goods and services that represent what Americans typically buy. This can include everything from gas to groceries and utility bills.
The federal government uses a version of the CPI to adjust Social Security benefits for inflation.
CPI, Minus Food and Energy
When the CPI is put out monthly, there’s a number that tells how much the prices of those 80,000 items have increased or decreased. There is also another number, referred to as the core number. This leaves out the prices of food and energy because they tend to fluctuate a lot. These increases may not reflect long-term pressures.
Personal Consumption Expenditures (PCE)
Personal Consumption Expenditures (PCE) are sometimes referred to as consumer spending. The PCE uses some information from the CPI, just in a different way. This can also be used to measure inflation. In 2000, the Federal Reserve announced it would switch its focus from the CPI to the PCE when setting its inflation target.
How Are the Countries With the Highest Inflation Different From the Countries With the Lowest Inflation?
Countries with the lowest global inflation rates have negative inflation rates referred to as deflation. Deflation increases the value of a country’s money. This enables more goods and services to be bought for the same amount. This usually happens when the supply of goods and services outpaces the supply of money in the economy. This is not the case in countries with the highest inflation rates.
Inflation can differ in countries for several reasons. Countries can be at different stages of their economic cycle or have different growth rates. Inflation can also differ because people in different countries buy different products and services.
What Are the Top 10 Countries With the Highest Inflation?
Now that we know more about inflation and its causes, it’s time to look at the top 10 countries with the highest inflation. Some of these inflation rates have far surpassed a double-digit number, reaching thousands and hundreds. These are the top 10 countries with the highest inflation as of 2023.
1. Venezuela — 1,198.0%
Venezuela’s economy used to be one of the best in South America with large per-capita wealth thanks to the largest oil reserves in the world. But, that reliance on petroleum left the country vulnerable to oil price fluctuations. When oil prices plunged back in 2016, the country’s economy was never able to fully recover.
At times, inflation in Venezuela is so bad that customers are told to ask employees how much items cost because the prices change so rapidly. This type of inflation is known as hyperinflation. This happens when a government overspends and prints large amounts of additional money to cover the costs.
2. Sudan — 340.0%
The rising inflation in Sudan became so bad that it led to protests and ultimately the ousting of President Omar al-Bashir in 2019. Sudan’s government is now trying to turn itself around, but it is difficult because it has been plagued by years of mismanagement. Inflation in Sudan has risen greatly in recent years due to the cost of food and a black market for U.S. dollars.
3. Lebanon — 201.0%
Lebanon's economy collapsed after it defaulted on about $31 billion worth of Eurobonds in March 2020. The rising costs of healthcare, water, energy costs, fuel costs, and other services have put Lebanon in an economic crisis.
The World Bank describes Lebanon’s financial condition as one of the worst in modern history. Many reforms are needed and hinge on a new government forming with a new leader.
4. Syria — 139.0%
Syria’s economy is at its lowest point since civil war started there nearly 12 years ago. There are severe fuel shortages with people lining up for fuel. The government has increased the price of gasoline and diesel so drastically that some people have stopped coming to work because they can’t afford transportation.
The cost of food and other essentials has skyrocketed leaving many homes in the dark, and people scrounging for food. The country’s economic problems have led to protests, some of which have turned violent.
Since wages don’t meet the cost of living, many people work 2-3 jobs and rely on humanitarian aid to survive.
5. Suriname — 63.3%
Suriname had a strong period of growth, but it slowed in 2019 and 2020. The country needs economic freedom to help fix its problems. Suriname’s economy is considered repressed and in need of much aid to improve the inflation rate.
6. Zimbabwe — 60.7%
Zimbabwe has a host of economic problems that have led to its high inflation. Many economists believe that Zimbabwe’s monetary expansion does not support its economic growth. When there is more money in the economy than goods and services to spend it on, prices increase, and purchasing power falls.
In Zimbabwe, the cost of living and high inflation has led numerous government employees to strike. Teachers and healthcare workers have also gone on strike to demand higher pay to meet rising costs.
7. Argentina — 51.2%
Latin America's third-largest economy posted its highest annual inflation rate in three decades in 2022. It is dealing with a political crisis, price hikes, and the government’s lack of a viable economic plan. Argentina has been suffering from runaway price hikes for some time now with nothing being done to improve the situation.
8. Turkey — 36.1%
The COVID-19 pandemic and the war in Ukraine are believed to be contributing factors to Turkey’s high inflation rates.
Problems in Turkey have been going in for years since 2013 when the currency steadily dropped in value. When this happens, items brought from abroad are more expensive. When most goods are imported, weaker currencies lead to higher prices. When this happens and salaries cannot keep up, the inflation rate is negatively impacted.
9. Iran — 35.2%
The Iran Chamber of Commerce has attributed the inflation hike in recent years to the effects of U.S. sanctions.
Iran has been dealing with price increases since the government got rid of a food import subsidy to save around $15 billion a year. The move led to a massive increase in food prices for items like bread, dairy, and meat.
The government has said its oil exports are increasing despite sanctions by the United States. But economic conditions continue to get worse with Iran’s currency hitting record lows.
10 Ethiopia — 33.0%
Ethiopia rounds out the list of the top 10 countries with the highest inflation. It is Africa’s second most populous country. Weak domestic market supply as a result of agricultural production constraints and a steady decline of the local currency are blamed for this country’s high inflation rates.
Ethiopia has also been battling the effects of the COVID-19 pandemic as well as recent droughts and the global impact of the war in Ukraine.
People in Ethiopia make hardly any money. On a good day, workers earn five dollars in wages. Many people in Ethiopia say that everything in the country increases except for wages.
A Bird's Eye View of Inflation Rates
Find out which countries today are facing the highest rates of inflation as of 2023.
Source: World Population Review
While inflation is common in global economies, some countries have higher rates compared to others. When inflation rates get higher than wage growth, it can cause severe economic complications. Countries with the highest inflation rates often find it difficult to afford basic necessities such as food prices, energy costs, and clothing.
Inflation is divided into three basic types, demand-pull inflation, cost-push inflation, and built-in inflation. When looking at inflation, it is important to realize how it is measured. The Consumer Price Index (CPI), is the most widely used tool to measure inflation. The Bureau of Labor Statistics produces this index that is designed to measure price changes. The CPI Minus Food and Energy and the Personal Consumption Expenditures are also used to measure inflation.
As of 2023, Venezuela and Sudan had the highest inflation rates in the world. Lebanon, Syria, and Suriname, rounded out the top five. Each of these countries is battling its specific economic problems that have led to skyrocketing inflation.
To learn more about the different countries listed here and about other countries around the globe, test your knowledge by taking one of our geography quizzes. From quizzes about where you are in the world to the shapes of various countries like Japan, Spain, and more, you’ll be surprised at all you can learn!
|General World Statistics
- Salwati, Nasiha. How does the government measure inflation? 2021.
- bloomberg.com. Argentina Inflation Hit Three-Decade High of 95% in 2022. Year.
- Derhally, Massoud. Lebanon's inflation rate increased 186.4% in the first 10 months of 2022. 2022.
- worldpopulationreview.com. Inflation Rate by Country 2023. 2023.
- Salwati, Nasiha. How does the government measure inflation?. 2021.
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