Inflation protests spread to Sri Lanka, Albania, Argentina, Panama, Kenya and Ghana
Sri Lanka is not the only country where household budgets are stretched to breaking point. In many countries, high inflation has raised the cost of living and protests are breaking out at a rapid pace.
In Sri Lanka, inflation reached 54.6% in June while the central bank raised interest rates to 15.5%. This means Sri Lankan workers are losing savings by the second, while debt repayments have increased, straining household budgets. The government failed to honor foreign debt and the IMF demanded that it raise taxes and fight corruption as a condition for receiving a bailout loan.
Thousands of Albanians marched in Tirana last week demanding the resignation of the government over alleged corruption and a massive rise in consumer prices. The Albanian central bank announced an interest rate hike of 1.25%, while official inflation in June was 6.7%.
Thousands of Argentines marched in Buenos Aires last week to protest the rising cost of living. With key interest rates at 52% and inflation at 60.7% in May, protesters urged the government to step down while rejecting IMF loans with ever tougher conditions for citizens.
Protests against the Panamanian government began on July 1, demanding that the government address the country’s high cost of living. The protesters demand higher wages, lower commodity prices and the removal of supply chain bottlenecks. While inflation remains low in the heavily monetized country, global supply chain issues have impacted Panama Canal revenues, reducing government revenues and projections.
Staple food prices have soared in Kenya and hundreds of protesters marched through Nairobi on Saturday, urging the government to lower food prices. Protesters claimed the high cost of living was caused by excessive state borrowing and rampant corruption. Kenya’s official inflation rate is 7.91%, while interest rates are 7.50%.
Ghanaians took to the streets in June to protest the high cost of living. The government was able to negotiate a bailout from the IMF after inflation hit 27.6% and raising interest rates to 19% didn’t seem to work. Ghana’s economy flirted with a debt crisis due to excessive borrowing.
There are other protests in the Netherlands, Belgium, Italy and China that appear to be about people unable to comfortably manage household budgets as their cost of living is threatened by environmental, social and governance policies. (ESG) and the inability to access bank liquidity.
While the United States remains strong and jobs data points to a booming economy, higher inflation could easily put pressure on household budgets and lead to protests. The FED is walking a tightrope and any mistakes or black swan events could easily spark protests.
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Disclosure: I own bitcoins and other cryptocurrencies.