It is abundantly clear that emerging and developing economies feel the brunt of inflationary pressures and inflation

GLOBAL INFLATION

Inflation’s new geography

According to the IMF, global inflation climbed from 4.3% in March to a peak of 4.9% in May, before easing slightly to 4.7% in June.  On paper, that looks like a modest correction.  In practice, it confirms something more unsettling: the steady disinflation that had been underway since early 2024 has stalled, and the reason is not really about interest rates, wage growth, or the usual textbook drivers.  It’s about geopolitics, and Governments’ response to it, which has become one of the strongest factors influencing what citizens pay at the till.

The conflict premium

Look at who’s paying the most, and a pattern jumps out immediately.  Venezuela (387.4%), Sudan (75.1%) and Iran (68.9%) sit at the very top of the global inflation table.  What connects them is not oil wealth or poor central banking.  It’s the recent or ongoing conflict.  Two of the three are oil producers, which should, in theory, be a cushion.  Oil is no longer the safety net it used to be for these economies as geopolitics now overrides the balance sheet.

It’s also worth pausing on just how wide the gap is between these three countries.  Venezuela’s inflation rate is not just high; it’s in a different league from Sudan’s or Iran’s.  A reminder that currency collapse, civil war, and sanctions each compound price pressure differently, and unpredictably.

The other extreme

At the opposite end, Costa Rica is the only economy expected to see outright deflation this year, while Niger, Chad, and Switzerland are all hovering in a tight band between 0.4% and 0.5%.  What’s notable here is the mix: alongside a wealthy, currency-strong economy like Switzerland sits two of the world’s lower-income states.  Low inflation, in other words, is not purely a marker of economic strength.  It can just as easily reflect weak domestic demand as it does sound monetary policy.

The giants: two very different kinds of “fine”

Among the major economies, the numbers look almost reassuring at first glance – China at 1.2%, the US at 3.4% – but each is a story of its own.

China has acted as the world’s dominant “swing buyer” (in other words China has as much power to control oil prices as OPEC does) of oil this year, cutting seaborne crude imports by approximately 45% since May to absorb the shock of Hormuz disruptions – a pullback widely credited with capping how far global prices spiked.  Read one way, China’s low inflation reading reflects that kind of deliberate, large-scale market management.  Read another way, it points to something more structural and harder to fix: years of weak domestic consumption that Beijing has struggled to reignite.

The US picture is more straightforward: inflation at 3.4% is down from a 2026 peak of 4.2% in May, mainly because energy and gasoline prices have cooled as the US-Iran war’s shock fades.  This is still well above the Federal Reserve’s target range of 2% and it has been this way for 65 months.  While the issue of whether the Fed will increase interest rate has been a common topic of late, many economists feel that it is now highly likely.  Consumers in recent surveys “showed that most US consumers are still gloomy about the economy and their finances” reports Al Jazeera.  With the Iran conflict escalating, it is fairly likely that inflation will have risen in August.  The new tariff war with Canada may not help the issue.

The region carrying the heaviest load

Zoom out to the regional level and the IMF’s numbers make the underlying inequality explicit: Africa continued to record the highest regional inflation rate of anywhere in the world, at 10.0% in June. That figure sits well above the global average of 4.7%, and it’s a reminder that “global inflation easing” is a headline that does not land evenly.

Much of that vulnerability comes down to structure: many of these economies rely heavily on imported food and fuel, and their currencies offer little protection when global prices change, so shocks that other regions can absorb land here almost in full.  And the scale here is not easy to miss: several of the countries behind this average are home to more people than entire European nations, meaning a far greater human impact.

Closer to home

In Sub-Saharan Africa, S&P conducted a survey with companies in February 2026 – the start of the Iran conflict.  At that time only 1% of the respondents reported a rise in costs linked to fuel prices.  Four months later in May 2026, 36% of the respondents said that costs linked to fuel prices had risen.  By this time the Strait of Hormuz was closed, and countries were potentially facing shortages.  But in a region of the world where agricultural activity is key, there was another consequence, fertiliser prices shot up!

It is abundantly clear that emerging and developing economies feel the brunt of inflationary pressures and inflation.

The takeaway

Put all of this together and a clearer story emerges than “inflation is up” or “inflation is down”.  Geopolitics is clearly a major driver this year and explain most of the countries at the extremes.  But exposure is not destiny.  China’s low inflation number came partly from deliberately absorbing a global oil shock at scale; the US saw its own relief tied directly to one conflict cooling, and just as quickly exposed when that conflict flared back up.

The countries that fared worst were not just the ones closest to conflict, they were the ones with the least room to manage it, whether through fiscal buffers, currency strength, or the market power to shape prices rather than simply absorb them.  That’s the more useful lens for 2026: not “who is near the fire”, but “who has the tools to control how much heat gets through”.

This is a commentary and comments are welcome by email to: info@eaa.co.ke .  The views expressed here are not necessarily those of the Association..