The impact of global inflation on the economies of developing countries is a crucial issue that affects people’s purchasing power and overall economic growth. As global inflation rises, many developing countries feel the impact through several economic channels. One of the main impacts is the increase in prices of imported goods. Developing countries, which often rely on imports for basic needs, will face higher costs. For example, energy and food products are often affected by global price fluctuations. Rising energy prices can result in a spike in transportation and production costs, which in turn increases the price of goods and services within the country. In addition, global inflation can reduce foreign exchange reserves in developing countries. When high inflation occurs in developed countries, foreign investment tends to flow there, leaving developing countries with a capital shortage. This has the potential to hamper infrastructure projects and local business development that are so necessary for long-term economic growth. From a monetary perspective, many central banks in developing countries were forced to raise interest rates to overcome internal inflation triggered by global conditions. This increase in interest rates often puts pressure on domestic investment and consumption, because borrowing costs increase. This condition could slow down the post-pandemic economic recovery, with these countries already struggling to return to a stable growth path. Currency instability is also a consequence of global inflation. When the US dollar strengthens, developing country currencies often depreciate, making imported goods more expensive. This currency weakness not only impacts the cost of living, but also has the potential to disrupt the balance of trade. Apart from the direct economic impact, global inflation can also cause social instability. People in developing countries, especially those with low incomes, are very vulnerable to price changes. Rising food and energy costs can fuel protests and discontent, leading to greater political instability. This creates additional challenges for the government in maintaining public security and welfare. The agricultural sector is often one of the most affected. Rising prices of fertilizer and raw materials can reduce food production and trigger a food crisis. Countries that cannot produce enough to meet domestic needs must rely on more expensive imports, thereby exacerbating food insecurity. Mitigation strategies that can be implemented by developing countries include diversifying import sources and increasing domestic production capacity. By reducing dependence on a single source, countries can better weather global price volatility. Additionally, investments in agricultural technology and renewable energy can help create resilience to market fluctuations. By understanding the impact of global inflation, developing countries can develop better policies to protect their economies in the long term, face global challenges more effectively, and work to improve people’s quality of life.
