The pace at which the cost of goods and services rise is known as inflation. It erodes the purchasing power of a nation’s currency and can be caused by either one or all of these: excess demand, high production cost and rising oil prices (it makes goods’ transportation expensive). It can also be caused by an increase in the amount of money circulating in the system on account of the central bank of a nation reducing repo rates (the rate at which central banks lend to commercial banks) to spur spending or printing of more currency to repay debts or bridge budget deficits.
Typically inflation leads to further price rise as people tend to buy more anticipating a brisk upswing in costs. But too high rates can throw an economy into disarray. There are quite a few nations which have been seeing double and triple digit inflation for over a while now that has created a deep recession. Interestingly, being major oil exporters, it is lower oil prices that has caused inflation in these nations and not vice versa.
Here’s a quick glance at such nations battling high inflation:
Venezuela (8,900 percent in the past 12 months)
South Sudan (55.6 percent in March 2018 year-on-year)
Suriname (reached 77 percent last September)
Nigeria (13.34 percent in March 2018 year-on-year)