A person pushing a big ball with a dollar sign on it up a steep slope.

Australia is in the middle of a cost of living crisis but we’re not the only ones. Here’s what inflation looks like around the world

Aussies are well aware that the cost of living is increasing. Prices of food, gas, petrol and rent have skyrocketed thanks to the inflation rate rising to 6.1 per cent in Juneto 21-year high.

While the Australian Bureau of Statistics reported a 2.4 per cent rise in annual wage growth for the March quarter, this has not been enough to compete with the soaring cost of living, leaving people struggling around the country.

But we’re not the only ones.

The Organization for Economic Co-operation and Development (OECD) is an international organization that includes 38 countries such as Australia, the USA, Canada, New Zealand and the UK.

International events such as supply chain interruptions, COVID-19 implications and the war in Ukraine saw inflation in OECD countries rise to 9.6 per cent in May compared to 9.2 per cent in April. This represents the sharpest price increase since 1988.

Here’s a crash course in inflation and what it looks like around the world.

What is inflation and what causes it?

Inflation measures how much more expensive a set of goods and services has become over a certain period of time.

The most well-known indicator of this is the Consumer Price Index (CPI).

The CPI measures the percentage change in the price of a basket of goods and services consumed by households.

Temporary changes in inflation may be caused by events like supply disruptions or seasonal sales, according to the RBA.

More persistent changes in inflation generally arise when people and businesses change their expectations about future price moves, and thus start demanding higher wages or passing on cost increases to their customers to compensate for them.

In the worst case, these expectations of rising prices can cause inflation to spiral out of control.