LIVE MARKETS-Inflation has been abnormally high for decades

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INFLATION HAS BEEN ABNORMALLY HIGH FOR DECADES

A recent Deutsche Bank report found that average annual inflation in 152 countries is higher than some may think, with no country averaging less than 2% annually since 1971, when the Bretton Woods system collapsed, and 107 countries averaging more than 5%.

“My view is that we continue to be in the most inflationary 50(ish) year period in the history of humanity,” Deutsche Bank analyst Jim Reid said in a note on Monday.

“There will be periods of low inflation, some may indeed last several years, but ultimately while we live in this period of fiat money and democracies, the easiest solution, or band-aid, to most economic problems will inevitably involve inflation, whether desired or not,” he said.

Of the countries in the study, Switzerland was the best at keeping a lid on inflation with an average annual price increase of 2.2%. Deutsche notes that until 1999 the Swiss National Bank was required to hold at least 40% of its reserves in gold and though this has since been abandoned, they have maintained notable holdings of the precious metal.

Countries with cities that have had inflation average less than 4% since 1971 are limited to Switzerland (2.2%), Japan (2.3%), Germany (2.7%), Singapore (2.7%), Holland (3.3%), Austria (3.3%), Malaysia (3.3%), Saudi Arabia (3.4%), Luxembourg (3.4%), Belgium (3.6%), China (3.8%), Canada (3.9%) and the United States (3.9%).

At the other extreme, Argentina, Brazil, Turkey, Russia and Mexico have seen large price increases of 82%, 75%, 35%, 25% and 19%, respectively.

(Karen Brettell)

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