Causes of the 2021-2023 Global Inflation Surge

Causes of the 2021-2023 Global Inflation Surge

The 2021-2023 Global Inflation Surge is a collective term for the series of high inflation rates transpiring in several countries around the world. The most affected countries include the United States and the European Union, as well as Brazil, New Zealand, and Turkey.

Other countries experiencing persistent high inflation rates include Australia, Canada, India, Russia, and the Philippines, among others. Data from the International Labor Organization showed that the annual rate of inflation worldwide accelerated to 9.2 percent in March 2022. The rate was at 7.5 percent in February 2022 and 6.4 percent in December 2021.

Senior statistician Valentina Stoevska at the ILO Department of Statistics noted that inflation more than doubled between March 2021 and March 2022. Drew Desilver of Pew Research Center also explained that the average annual inflation rate in the first quarter of 2022 in 37 countries was at least twice as it was in the first quarter of 2020.

There is no consensus among economists as regards the exact causes of the 2021-2023 Global Inflation Surge. However, there are several theories based on notable events and the subsequent chain of events that have widespread macroeconomic and microeconomic implications

Explaining the Possible Causes of the 2021-2023 Global Inflation Surge

Impacts of the COVID-19 Pandemic and the Corresponding Global Supply Chain Disruption

The COVID-19 pandemic, which started as an outbreak in China in late 2019 before becoming a global pandemic and a public health crisis in the second quarter of 2020, slowed down most of the economies around the world due to expansive stay-at-home policies that affected regular business activities across different sectors and industries.

One of the more specific impacts of the pandemic on the global economy is the disruption of the global supply chain. The capabilities of suppliers to produce and supply production inputs were negatively affected by restricted movements and low demands.

Note that manufacturing for end-use consumer products also slowed down due to the shortages in the supplies, as well as the decreasing demands. The same is true for vital commodities such as oil and gas. Global shipment was also negatively affected. The pandemic fundamentally created complicated global supply chain problems.

However, several countries succeeded in managing the COVID-19 pandemic following the introduction and administration of vaccines beginning in 2021. Economies started to reopen. Soon, employment rate growth and consumer demand increased.

Business activities failed to catch up with the demand because the problems in the global supply chain remained unresolved. The production capacities of both suppliers and end-use producers were not enough to meet the increasing consumer demands. This is one of the theories of the causes of the 2021-2023 Global Inflation Surge.

High Oil and Gas Prices and Global Food Supply Shortage Due to the Russian Invasion of Ukraine

Other theorized causes of the 2021-2023 Global Inflation Surge are the high prices of oil and gas in the global market, as well as the shortage of global food supply. Note that the COVID-19 pandemic had a significant impact on both industries.

However, the Ukraine-Russia Conflict, specifically the invasion of Ukraine by the Russian Armed Forces in February 2022 worsened the situation. Russia is a key producer and exporter of oil and gas while Ukraine is one of the producers and importers of barley, wheat, cereals, corn, sunflower oil, and rapeseed oil in the world.

The armed conflict between the two countries prompted concerned state actors such as the United States and the European Union to impose economic sanctions against Russia as part of their foreign policy and disrupted agricultural activities in Ukraine.

Fundamentally, the situation placed additional pressure on the global oil and gas market and global food security already weakened by the COVID-19 pandemic. Remember that fossil fuels are an important input in manufacturing and transportation. Furthermore, global food production has suffered from the impacts of the pandemic and the ongoing climate emergency.

Economist Mark Zandi explained that the prices of fossil fuels and commodities jumped in anticipation of the Russian invasion of Ukraine while increasing further in response to the invasion. The conflict was a major contributor to the high inflation rate in the U.S.

Theorizing Further the Causes of the 2021-2023 Global Inflation Surge

Note that there are four schools of thought that provide different perspectives on the causes of inflation. These are monetary inflation, cost-push inflation, demand-pull inflation, and build-in inflation. Some of these theories can also serve as foundational concepts for understanding and explaining the causes of the 2021-2023 Global Inflation Surge.

The high inflation rates experienced by several countries across the world cannot be explained by a single cause or a particular point of origin. From one perspective, the impact of high consumer demand following the pandemic is a classic example of the demand-pull theory.

However, the 2021-2023 Global Inflation Surge can also be explained by the monetary, cost-pull, and built-in theories of inflation. To illustrate, the pandemic prompted governments to release stimulus packages as part of their fiscal policy and the central banks to lower interest rates as part of their monetary policy.

These policies were intended to prevent economic collapse by circulating more money to promote consumption. The gradual opening of economies increased the money supply in circulation further following the growth in employment and wage.

People essentially had more spending power to chase a limited number of goods. This also demonstrates monetary inflation. Still, cost-push inflation can also explain the global inflation surge because the pandemic, the conflict between Ukraine and Russia, and other global events made production more expensive due to supply chain disruptions.

The surge can also be explained by the build-in or hangover inflation. This theory asserts that the interrelationship between cost-push inflation and demand-pull inflation creates a vicious cycle that results in prevalent and persistent high inflation rates.

In putting things in perspective, the pandemic depressed the economy but countries soon bounced back at a rate that was too fast for business activities to catch up. Factoring in the impact of the Ukraine-Russia Conflict in the equation, the entire situation illustrates the cyclic interplay between production costs due to disruptions and consumer demand from 2021 to 2022.


  • Desilver, D. 2022. “In The U.S. And Around The World, Inflation Is High And Getting Higher.” Pew Research Center. Available online
  • Mui, C. 2022. “Top Economist Mark Zandi Says Forget Biden’s Stimulus—Putin’s War In Ukraine Is By Far The Biggest Driver Of Inflation.” Fortune. Available online.
  • Stoevska, V. 2022. “Inflation More Than Doubled Between March 2021 and March 2022.” ILOSTAT. International Labor Organization. Available online.